Governor's Corner

Governor Scicluna discusses monetary policy with David Barwick (Econostream)

Governor Scicluna sat down for an interview with David Barwick from Econostream Media, a financial media source that specialises in Monetary Policy. The interview was the first one given to a foreign media source and provided the Governor with the opportunity to express his views on the economic situation and the upcoming decisions of the ECB.

During the discussion, Governor Scicluna highlighted that "both on the fiscal side and on the monetary side, authorities definitely need to be watchful of cliff effects" and emphasised the importance of inflation expectations remaining well-anchored. As a result, he expects a decision regarding the Pandemic Emergency Purchase Programme (PEPP) and other monetary policy programs to be made by December, once the macroeconomic projections prepared by the ECB staff have been updated. Within this context, he described himself as being "pragmatic" in his approach to monetary policy, on occasion agreeing with a more hawkish stance while sometimes supporting a more dovish one. This is partially motivated by Malta's own experience and history, which differs from that of other EU countries.

On the issue of policy communication, the Governor clarified why the ECB avoided using the term tapering and preferred calibration: "When we announced it, we hadn't yet seen the necessity of a programme of tapering, with a clear beginning and end, without hesitating or reversing course. In December we'll be very explicit based on updated projections."

The Governor acknowledged the persistence of some challenges, such as the pandemic, and the emergence of new risks, explaining that "for world trade to succeed and normalise, we need all countries to normalise, and we're not there yet". However, he remains "cautiously optimistic".

Finally, on the situation in Malta, the Governor noted that the country "benefits from a highly elastic supply of foreign labour both from the EU countries and elsewhere. Inflation would increase in line with the EU's but not because our labour market is currently somewhat tight."

The full interview appears here.

A summary of the interview appears here.

Governor Scicluna discussess monetary policy with David Barwick (Econostream)

During an interview with David Barwick (Econostream), Governor Scicluna explained his views on the measures that the ECB has implemented in response to the COVID-19 pandemic and the challenges ahead