Speakers
Session overview
Objectives
The macroeconomic environment has become more uncertain, with renewed inflationary pressures, weaker growth, high public debt and ongoing balance-sheet normalisation. Against this backdrop, the challenge for central banks is to preserve price stability while managing the interaction between monetary policy, fiscal vulnerabilities, financial stability and market discipline.
The session will discuss how central banks should respond to inflationary shocks that may be temporary in origin but leave a lasting impact on the overall price level and assess the risk that such shocks could generate broader and more persistent inflationary pressures through second-round effects, expectations or fiscal interactions.
The, the session will examine the lessons from a prolonged period of exceptionally low interest rates and abundant liquidity on productivity, capital allocation, growth and financial stability and how central banks should navigate the interaction between monetary policy, high public debt levels and fiscal sustainability, while preserving their independence and avoiding fiscal dominance.
Finally, the session will discuss the role of balance-sheet normalisation and quantitative tightening in restoring market discipline, improving the pricing of sovereign and financial risks, and encouraging a more efficient allocation of capital. In particular, it will assess how central banks can reduce their footprint in financial markets and progressively return liquidity management to market participants and the banking system, while preserving financial stability and an effective transmission of monetary policy.
Points of discussion
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How should central banks respond to inflation shocks that may be temporary in origin but have lasting economic effects?
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Monetary policy normalisation in a high-debt environment: how can central banks restore market discipline while preserving financial stability?