Isabel Schnabel: Monetary policy and inequality

Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at a virtual conference on "Diversity and Inclusion in Economics, Finance, and Central Banking", Frankfurt am Main, 9 November 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Economic and social inequality is one of the biggest challenges facing societies worldwide. Even before the outbreak of the coronavirus (COVID-19) pandemic, a large majority of European citizens considered differences in people's incomes to be too large and thought the government should take measures to reduce them.

The pandemic has exacerbated perceptions of rising inequality. Despite far-reaching fiscal measures supporting the incomes of those most affected by the crisis in particular, rising asset prices, such as those of stocks and real estate, have fuelled concerns in parts of society about an economic system that is increasingly perceived as being unjust.

Central banks are no longer considered bystanders in this discussion. The use of asset purchases, in particular, has triggered concerns that monetary policy may raise economic inequality by favouring those who own financial assets.