Lee Says Draghi Credibility Allows ECB Leeway

The transcript discusses the reliance on soft data and political risks in economic policy, particularly focusing on the European Central Bank (ECB) and the Federal Reserve (Fed). It highlights the ECB's potential withdrawal of stimulus and the importance of core inflation rates. The discussion emphasizes the need for hard data over sentiment in policy-making, noting the challenges faced by the Fed in aligning sentiment with actual data. The ECB's policy outlook is also explored, with a focus on Draghi's credibility in managing economic expectations.

What is the main concern regarding the reliance on soft data in Europe?

• It is only available annually.

• It is too expensive to collect.

• It is not recognized by the ECB.

• It is not as reliable as hard data.

Why is the ECB hesitant to withdraw its stimulus?

• Due to high unemployment rates.

• Because of the core inflation rate.

• Due to a lack of public support.

• Because of political instability.

What is the risk of basing policy decisions on sentiment?

• It can lead to inaccurate forecasts.

• It is too time-consuming.

• It is not supported by the public.

• It is too costly.

What is keeping the ECB anchored to its current policy?

• The high cost of policy change.

• The influence of other central banks.

• The lack of real data.

• The need for more political support.

Under what condition might the ECB change its policy stance?

• If there is a change in leadership.

• If the real data starts to improve.

• If there is a public demand for change.

• If other central banks change their policies.