Speakers
Objectives
This session will explore two key dimensions of the current monetary dilemma:First, we will examine how monetary policy can adapt to a world marked by persistent inflation uncertainty and structural shocks. After a decade of subdued inflation, central banks have been grappling with price surges, driven in part by supply-side constraints, energy disruptions, and geopolitical tensions, not least concerning tariffs and the configuration of the global trade system. Should we be confident about inflation returning durably to target, or are we at risk of a structural shift towards a higher inflation regime?
Second, the discussion will address the broader macro-financial role of monetary policy in ensuring stability and fostering effective coordination with fiscal authorities. With worrying fiscal drift in a number of euro area countries and spending pressures including for security needs, questions arise about the sustainability of such policies in the context of the need to tighten monetary conditions. How can coordination be strengthened without compromising the independence of central banks?
Are we at risk of entering again a regime of fiscal dominance or will the Economic Governance Framework help foster sustainable policies? Moreover, what lessons can be drawn from the prolonged period of low interest rates with regard to financial stability, capital allocation, productive investment and the profitability of banks?
Points of discussion
- How should monetary policy adapt in the face of persistent inflation uncertainty and structural shocks, not least concerning tariffs and the reconfiguration of the global trade system?
- In the context of serious public fiscal drift in some eurozone countries, what role should monetary policy play in preserving macro-financial stability and ensuring effective coordination with the fiscal authorities?