The European Central Bank changes its strategy to allow more room to fight inflation.

The European Central Bank changes its strategy to allow more room to fight inflation.

The European Central Bank changes its strategy to allow more room to fight inflation.

The European Central Bank headquarters in Frankfurt, Germany. Inflation in the eurozone has been hovering around the central bank’s 2 percent target in recent months.
Credit…Ralph Orlowski/Reuters

The European Central Bank said Thursday it would adjust the guideposts it uses to set monetary policy, giving its more room to deploy crisis measures even if inflation rises above its official target. The bank also said it would begin using its clout in bond markets to fight climate change.

After concluding an 18-month review of its strategy, the bank’s Governing Council said Thursday that it would no longer aim to keep inflation below, but close to, 2 percent. Rather, it would simply aim for 2 percent and be ready to accept “a transitory period in which inflation is moderately above target.”

The seemingly minor change gives the bank space to keep pumping credit into the eurozone economy even if annual inflation rises above 2 percent, as long as policymakers think the jump is temporary.

That situation may soon materialize. Inflation in the eurozone has been hovering around 2 percent in recent months, and could rise above the target as economies reopen and shortages of needed products like semiconductors become more acute. According to the previous strategy, the central bank would be obligated to raise interest rates or take other measures to slow the economy, even if the crisis was not over.

By law, controlling prices in the 19 countries of the eurozone is the central bank’s main priority, so any adjustment to its approach to inflation has broad implications for the interest rates that businesses and consumers pay on loans, and for employment and economic growth.

The bank also said it would take climate change into account when it buys corporate bonds as part of its stimulus measures. The bond purchases, made with newly created money, are a means to stimulate borrowing and economic growth. But in the future, the European Central Bank will favor companies that have made sincere efforts to reduce the amount of carbon dioxide they produce.

In practice, the central bank has already provided ample evidence it was willing to bend its own rules to fight the pandemic, or the debt crisis that nearly destroyed the euro a decade ago.

“We do not expect the new strategy to shift the outlook for the E.C.B.’s monetary policy stance significantly,” Holger Schmieding, chief economist at Berenberg Bank, said in a note to clients ahead of the announcement. “Instead, it will formally codify the approach which the E.C.B. has pursued anyway. This will make it easier for the E.C.B. to communicate with markets and the public.”

The European Central Bank’s new approach is sure to generate criticism from places like Germany, where fear of inflation runs deep. Jens Weidmann, a member of the Governing Council and president of the Bundesbank, Germany’s central bank, has called for the European Central Bank to begin dialing back its stimulus to ensure that inflation does not get out of control. He has also said that climate change was not a matter for central banks.

But Mr. Weidmann belongs to a minority on the Governing Council. The central bank said in a statement that it believed that climate change was relevant to “inflation, output, employment, interest rates, investment and productivity; financial stability; and the transmission of monetary policy.”

Lina Khan, the chair of the Federal Trade Commission. Amazon has argued that her views against Big Tech should disqualify her from participating in actions against the company.
Credit…Graeme Jennings/Pool, via Reuters

Last week, Amazon fired a pre-emptive shot at the new chair of the Federal Trade Commission, Lina Khan, using a common line of attack on policymakers who held strong opinions in the past: trying to disqualify them for alleged bias.

Ms. Khan made her name with a forceful view on Amazon and antitrust, arguing that the sprawling tech giant showed how competition law was “unequipped” for the digital age. This, among other things, disqualifies Ms. Khan from participating in F.T.C. actions against Amazon, the company said. Amazon is a subject of the F.T.C.’s inquiry into Big Tech’s acquisitions of smaller rivals, and the agency is separately reviewing its proposed purchase of MGM.

So, the DealBook newsletter asks, does Amazon have a chance?

Disqualifying a commissioner isn’t easy. At her Senate confirmation hearing, Ms. Khan rejected the idea of a blanket disqualification from Big Tech investigations, saying she would consider such requests on a case-by-case basis and consult with F.T.C. counsel. Simply voicing opinions critical of companies is rarely cause for recusal, and most disqualification attempts fail.

  • Impartial “does not mean uninformed, unthinking, or inarticulate,” explained a federal appeals court in 1980, reversing the disqualification of an F.T.C. commissioner.

  • In 2010, Intel’s attempt to disqualify a commissioner who had previously been its antitrust counsel failed because the F.T.C. said his previous work bore no “substantial relationship” to the review at issue.

  • In 2012, a prospective commissioner who had worked for Google promised senators that he would recuse himself from Google-related cases for two years to avoid the appearance of impropriety. That is a point Amazon stressed in its motion — that the appearance of fairness matters, too.

Amazon’s filing may be “a warning shot,” said Bruce Hoffman, a partner at Cleary Gottlieb and the former director of the F.T.C.’s competition bureau. Because it isn’t attached to a case and aims to recuse Ms. Khan broadly, it essentially serves as a notice to the agency. It could be Amazon’s way of saying, “if you participate, this could haunt you,” he said.

Commissioners are chosen for their policy views, as well as their expertise, so many would be disqualified if having opinions was disqualifying, said the antitrust law scholar Eleanor Fox, Ms. Khan’s former colleague at Columbia. Asked whether Amazon’s motion would succeed in blocking Ms. Khan, she replied: “Oh, I don’t think so.”

President Biden drives an all-electric Ford F-150 in May. He is considering proposals to force automakers to shift to electric vehicles.
Credit…Doug Mills/The New York Times

President Biden’s goal of cutting pollution by 50 percent from 2005 levels by 2030 would require a radical transformation of the nation’s economy away from fossil fuels, including a rapid shift by American drivers from internal combustion engines of the last century to zero-emissions electric vehicles.

To help meet that goal, the Biden administration is starting to write stringent auto pollution rules that could cut emissions deeply and force carmakers to increase sales of electric vehicles, according to four people familiar with the plan. That’s in addition to plans to restore tailpipe emissions standards to roughly the level set by President Barack Obama, Coral Davenport reports for The New York Times.

The risk for automakers is whether consumers will purchase electric vehicles that are generally more expensive and logistically challenging, because the nation lacks a network of electric-vehicle charging stations.

If Congress approves hundreds of billions of dollars for construction of charging stations as well as tax incentives for both buyers and makers of electric cars and trucks, Mr. Biden would most likely be able to secure industry support for more stringent rules that would result in more electric vehicles on the road. Currently, only about 2 percent of vehicles sold in the United States are electric.

But if a final infrastructure package includes little or no spending on electric vehicles, a tougher tailpipe rule would likely face opposition from automakers, who would be forced to build and try to sell costly electric cars.

Mr. Biden announced in late June that he had reached a deal with a bipartisan group of senators on an infrastructure package that would include about $7 billion of spending to build electric vehicle charging stations.

But that is barely a fraction of the $174 billion that Mr. Biden wants to spend on vehicle electrification in a second infrastructure bill this fall, which Democrats hope will include robust provisions to fund 500,000 electric vehicle charging stations and generous tax rebates for purchasers of electric vehicles. Neither bill is guaranteed to pass in the closely divided Congress.

Google’s European headquarters in Dublin span four buildings, featuring a wellness center and a swimming pool.
Credit…Paulo Nunes dos Santos for The New York Times

The model that has fueled Ireland’s economy for decades is in peril, as a coalition of 130 nations works to overhaul a global tax system that Ireland depends on to lure businesses looking to reduce the taxes they pay.

At stake is Ireland’s low official corporate tax rate of 12.5 percent and a tax regime that helps global companies based there avoid paying taxes to other countries where they make profits, a setup that has put billions of euros into Ireland’s tax coffers and created hundreds of thousands of jobs, Liz Alderman reports for The New York Times.

Ireland was one of only nine countries not to sign on to a sweeping framework last week, overseen by the Organization for Economic Cooperation and Development, that could undermine those advantages. The accord would impose a new 15 percent global minimum corporate tax rate and force technology and retail giants to pay taxes where their goods or services were sold, rather than where the company had its headquarters. The details of the agreement are expected to be completed in October, and then each country’s government would need to adopt it.

Some might say the optics aren’t good — Ireland risks looking as if it wants to deprive other countries of their fair share of tax revenue — and the government in Dublin has been grudging in its statements on the issue. The finance ministry declined interview requests and did not respond to written questions. Similarly, multinational companies that have profited from the low-tax regime have been conspicuously silent, declining requests to discuss the issue.

An overhaul of the global tax order could cost Ireland 2 billion to 3 billion euros annually in lost tax revenue, the finance ministry estimates. Much of that money would go to other countries.

Overall, the Irish government hauled in €12 billion in corporate taxes last year, up from €4 billion seven years ago. Over half of the take came from the 10 largest multinationals.


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