Back to the future: intellectual challenges for monetary policy

Speech by Claudio Borio, Head of the BIS Monetary and Economic Department at the David Finch Lecture, University of Melbourne, 2 September 2021, virtual.

The central banking community is facing major challenges – economic, intellectual and institutional. A key economic challenge is the need to rebuild room for policy manoeuvre, which has fallen drastically over time. This lecture focuses on the intellectual challenge, ie facts on the ground are increasingly testing the long-standing analytical paradigms on which central banks can rely to inform their policies. It argues that certain deeply held beliefs underpinning those paradigms can complicate the task of regaining policy headroom.