philip r lane : interview with rte ( ireland ’ s national television and radio broadcaster ) interview with mr philip r lane, member of the executive board of the european central bank, and rte ( ireland ’ s national television and radio broadcaster ), conducted by mr robert shortt on 13 february 2020 and broadcast ( in part ) on 13 february 2020. * * * there has been some criticism of ecb policy when it comes to quantitative easing and negative interest rates. some people have described it as an experiment in monetary policy. there ’ s been this assertion that interest rates are no longer an effective tool for stimulating economic activity. people have painted the scenario of the japanification of the eurozone economy. what ’ s your response to all of that? we don ’ t agree with that analysis. if you go back to 2014, which is when this policy started, since then ecb monetary policy has been very effective. we have seen very low interest rates for firms and households. we have seen a big increase in employment in the euro area economy. and we do see inflation moving upwards. without these policies these disinflationary pressures would be more severe. we would not only have lower inflation : we could even have the risk of deflation. and without these policies the recovery in europe we have seen in the last five or six years would not be so far advanced. so we think ecb policy is still effective. going back to your question about japan, all of this is very much with the intent of avoiding the situation of deflation that japan had from the mid - 1990s to about 2013. that was a very costly episode to have and we are intent on making sure inflation goes back to target in order to avoid that situation. what would you say to the criticism – and it ’ s been quite loud in some eurozone countries – that the ecb has been deaf to some of the side effects of its policies, say, in particular towards savers and pensioners? at any time when the interest rate goes down, it clearly has a different effect on those who have a mortgage and those who have a lot of debt — governments and corporates — than it does on those households that are maybe saving for retirement, those who are accumulating funds and pension funds. that has always been true. monetary policy has different effects on savers and debtors. what is true at the moment is that this episode has been going on for years now. we have had very low interest rates

the mortgage situation in ireland. those global factors will be there no matter what happens to these mortgage rates in ireland. it ’ s a very important issue for the individual in terms of coping with the mortgage they face. but in terms of saying this will somehow contribute to a repricing of the value of property, i don ’ t think that ’ s how it will work. we ’ ve just had an election. we probably won ’ t have a government for some time. what economic advice would you give to any incoming government? every six weeks when we make our monetary policy statement, the last part of our statement essentially gives the list of our advice. one thing is that we do think the european economy will be better off the more governments do to improve the functioning of the economy. there is a long list of recommendations, called the country - specific recommendations that the european commission offers to the member countries. ireland has a long list in terms of improving infrastructure, productivity, etc. there are many dimensions to it, but i think everyone can identify 2 / 4 bis central bankers'speeches the same list. we also say that those countries with a strong enough fiscal position can do more to raise the level of economic activity in the euro area. but we also say that those countries with high levels of public debt, and less robust public finances, need to make sure their fiscal position is prudent. what i have just said there doesn ’ t boil down to any fixed set of demands. in the end, the decisions of government are correctly left with the political system. but in terms of some core principles, it ’ s to balance prudence in managing the public finances and to make sure that the government policies are promoting sustainable growth : sustainable, long - term, climateconscious, consistent with the carbon transition, consistent with raising productivity. if you read the manifestos of all the parties, they all have different ideas, but i think all share the same principle, which is : the more we can have a sustainable economy that is delivering employment and so on, the better for the future of the irish economy. is the irish economy one of those countries that has more room to stimulate economic activity? well, as you know, this is a long - running debate. at one level, there has been a lot of progress. all of these difficult years of austerity have led to a big improvement in public finances and the number one uncertainty is about the future of corporation tax revenue,