Quick recap of the financial news of January 2022.
Euro area inflation was 5.1% in January.
The ECB says that this inflation is beyond its control, because it's driven by international energy markets and bottlenecks in supply chains.
In this episode, I do three proposals for the European Central Bank to get a grip on energy-driven inflation.
1) Buy shares of oil and gas companies. As a major shareholder, the ECB could force them to lower prices. See also this tweet from 2020: https://twitter.com/JanMusschoot/status/1322177512554856454
2) Fund a European Green Infrastructure Company. This will increase the supply of cheap, renewable energy. Details here: https://blog.janmusschoot.be/2017/11/15/green-infrastructure-bonds-with-macro-strings-attached-how-the-ecb-could-fulfill-its-mandate-by-fighting-climate-change/
3) Lower the interest rate for energy-efficiency investments. Meanwhile, the ECB can hike rates on other loans. This will stimulate a shift of resources in the real economy towards renewable energy and efficiency. In the long run, this will speed up the transition to a net-zero emission economy and reduce the effect of fossil fuel prices on inflation.
Thanks for listening!
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