ECB monetary policy: proposal for climate-friendly interest rate system

When the ECB turns the interest rate screw this Thursday as expected, the result could stall climate action. A new study by the Bertelsmann Foundation suggests a monetary policy that would not stall decarbonization. The fiscal dilemma: Higher interest rates lead to less investment and less climate-neutral transformation of the economy. At the same time, an „interest rate hammer“ would strangle the room for maneuver even more in the long term, warns the foundation’s economic policy spokesman Daniel Posch, because the consequences of unchecked climate change threaten the price and financial stability of European economies.