In his Andrew Crockett Memorial Lecture held at the Bank of International Settlements a week ago, Professor Raghuram Rajan from the University of Chicago’s Booth School of Business described the situation quite well: “When the central banker offers himself as the only game in town, in an environment where politicians only have choices between the bad and the worse, he becomes the only game in town.” But we are not the only game in town.
I wish to remind you all that, through its monetary policy, the Central Bank can influence aggregate demand in the economy. But monetary policy cannot solve deeper structural problems or lift the growth potential of the economy. That requires bringing more balance to fiscal policy and speeding up the implementation of structural policies that eliminate supply-side constraints to private investment in the nonenergy sector.