In addition, the conference features two keynote speeches that address some of the most important issues facing central banks: monetary-fiscal interactions and the macroeconomics of climate change. Under normal conditions, the informal discussions at these annual conferences provide a useful opportunity to increase external awareness of the monetary policy research conducted at the ECB and across the Eurosystem. Since such informal interactions cannot be reproduced in webinar format, I will take this opportunity to highlight the extraordinary research efforts of the ECB and Eurosystem staff in supporting our recent monetary policy strategy review. In particular, eighteen ECB occasional papers were released on 21 September. These papers provide not only a superb series of surveys of the state of research on a given topic but also report many substantive new research findings: I believe that these occasional papers lay important foundations for many research programmes in academia and in central banks for years to come. The research reported in these papers shaped our new monetary policy strategy. In particular, a central theme of the review was to work out the implications of the trend decline in the equilibrium real interest rate and the associated implications of the effective lower bound for the conduct of monetary policy. One basic conclusion of the review is that it is essential to build a sufficient medium-term inflation buffer (as captured by the symmetric two per cent inflation target) to create the monetary policy space required to be effective in tackling negative shocks.
Philip R Lane: The monetary policy toolbox and the effective lower bound Welcome address by Mr Philip R Lane, Member of the Executive Board of the European Central Bank, at the ECB Conference on Monetary Policy “bridging science and practice”, Frankfurt am Main, 11 October 2021. * * * It is a pleasure to welcome you to the 2021 edition of the annual ECB Conference on Monetary Policy. As captured in the title of this year’s event, this conference series serves a vital role in bridging the science and practice of monetary policy. In particular, it is essential for the ECB to incorporate in our analytical framework the theoretical and empirical insights generated by the global academic community, and the conference format (albeit in webinar mode again this year) is very effective in providing us with a platform to discuss the latest developments. The breadth of academic research (in terms of both topics and research techniques) that is relevant for monetary policy is quite wide and this is reflected in the composition of the conference programme. The agenda includes research that exploits financial market data to examine the transmission of monetary policy, studies the impact of the pandemic on firms and banks using entity-level datasets, analyses the interactions between monetary policy and financial stability in a full-scale macroeconomic model, and explores the impact of monetary and fiscal policies on the formation of household expectations.