Pivot of ECB's Monetary Stance ECB's Interest Rate Decision and Implications in the Dynamics of Change in Europe and the Global Economy • Adjust the Equilibrium Against Inflation: Europe has been under immense price pressure latest since Q2 2022 (global supply shock and war) but the hard part is always about how to best anchor market expectation with a sense of proportionality and rationality. With this in mind, press conference from June 10, 2022 has achieved a great deal, indeed with a good grasp of hard realities and yet with oozed confidence in forward-looking view of the entire second half in CY 2022; • Prepare for the Structural Transition Ahead: Europe's decision to pivot from energy import from Russia is certainly a watershed moment of the generation, and the transition will undoubtedly require a stronger structural decision baseline that touches upon causes and causalities, ranging from consumption and investment, to socio-economics and mid- and long-term security (i.e., energy and climate transition, see also the Exhibit). Such caveat indeed implies commensurate governance decision, essentially in both macrofiscal and macrofinancial terms conducive to establishment of the equilibrium to a higher sustainability ground going forward. • Resonate with Global Economic Sentiment: Macroeconomic decision is also a reflection of the complexity in today's globalized world, from trade and finance to sustainability and competitiveness. Rate differential is clearly what's on the line in commanding the gravity of capital flows at the end of today's loose monetary policy era. But the ongoing shift of sustainability governance will also require perspective on a higher order and at a longer time horizon, notably in the sense of how prudent macroeconomic choice (i.e., implications of policy credibility) may help stipulate a conducive decision-making environment substantive to mutually reinforcing sustainability and resilience in the global economy at the transition.

1. Bangkok, Thailand / Page 1 (2) Edition: June 10, 2022
Pivot of ECB’s Monetary Stance
ECB's Interest Rate Decision and Implications in the Dynamics of
Change in Europe and the Global Economy
Siripong Treetasanatavorn
Sloan Fellow, Massachusetts Institute of Technology
Implications of the ECB’s Decision at Today’s Transition:
A. Command forward-looking expectation in the market with a sense of rationality:
• Adjust the Equilibrium Against Inflation: Europe has been under immense
price pressure (supply shock and war) but the hard part is always about how
to anchor market expectation with a sense of proportionality and rationality.
With this in mind, ECB leadership at the press conference on June 9, 2022¹
has achieved a great deal, indeed with a good grasp of hard realities, and yet
with oozed confidence in forward-looking view of the remaining time in 2022;
B. Strengthen macro-governance baseline required for a new sustainability policy:
• Prepare for the Structural Transition Ahead: Europe's decision to pivot²
from energy import from Russia is undoubtedly a watershed moment of the
generation, and the transition will further require a stronger structural decision
baseline that touches upon causes and causalities, ranging from consumption
and investment, to socio-economic and security concern (energy and climate
transition, see the Exhibit). Such caveat indeed implies governance decision,
in both macrofiscal and macrofinancial terms conducive to the establishment
of the economic equilibrium to a higher sustainability ground going forward;
C. Bridge the widening gaps of global investment return while maintaining credibility:
• Resonate with Global Economic Sentiment: Macroeconomic decision is
also a reflection of the complexity in today's globalized world,3
from trade and
finance to sustainability and competitiveness. To this end, rate differential is
clearly what's on the line in commanding the gravity of capital flows at the end
of today's loose monetary policy era. Despite and because of that fact, the
ongoing shift of sustainability governance still requires perspective from a
higher order and at a longer time horizon, especially in the sense of how
prudent macroeconomic choice (implications of policy credibility) may help
stipulate a conducive decision-making environment. substantive to mutually
reinforcing sustainability and resilience in the global economy at transition.

2. S. Treetasanatavorn. Pivot of ECB’s Monetary Stance
Edition: June 10, 2022 Bangkok, Thailand / Page 2 (2)
Exhibit: EU's pivot from the economics of fossil energy (primarily imported from
Russia; Source: Eurostat²) to a new sustainable equilibrium, substantiated by a
mix of renewable sources with the economies of scale/scope on a regional level.
References (in appearance order):
1. See latest press conference of the ECB (2022) at:
https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.mp220609~122666c272.en.h
tml
2. See discussion from perspective of the energy sector at the Economist (2022):
https://www.economist.com/finance-and-economics/2022/06/05/europes-economy-
grapples-with-an-acute-energy-shock; See also statistics of EU-Russia trade with an
emphasis on energy from Eurostat (2021):
https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN-20220307-1
3. See implications from the decision of the Reserve Bank of India as a reflection from
Asia and the international community as discussed at India Express (2022):
https://indianexpress.com/article/explained/reserve-bank-of-india-repo-rate-impact-
explained-7958326/