Today we have published the August edition of Global Monetary Condition Monitor our monthly flagship publication, which covers monetary policy in 26 countries around the world and gives an overview of global monetary matters and market implications of global monetary trends.

In this edition of the Monitor we focus on the monetary impact of the recent fairly large moves in global currencies and particularly on the impact of the move in EUR/USD.

Since the ECB started to implement a program of quantitative easing in January 2015, monetary developments in the euro area have been positive. Over the past two years, our Monetary Indicator for the Eurozone has been close to zero, indicating that the ECB was on track to hit its 2% inflation target within the next 2-3 years.

However, the euro’s relatively sharp appreciation in recent months has sent our Monetary Indicator trending downwards. Eurozone monetary conditions are now the tightest they have ever been since the ECB started its QE program in January 2015. ECB chief Mario Draghi ought to ease up a bit. An appropriate moment for this would be at the ECB Governing Council’s next meeting on September 7.