The challenges associated with COVID-19 have called for exceptional policy responses said IMF’s Tobias Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department as he presented his department’s latest paper at IMF Policy Dialogue: New Policy Frameworks for a "Lower-for-Longer" World event which took place on Tuesday, November 24.
The paper argues that central banks should consider not only the path of output, unemployment, and inflation, but also expected macro-financial stability, with the proposed approach capable of jointly quantifying risks to all these variables.
“I want to underscore that continued monetary accommodation seems crucial in supporting economic activity and helping central banks achieving their objectives. But central banks will also need to be vigilant to the risks that are attendant on highly accommodative monetary policies should take account of these intertemporal tradeoffs as a key part of decision making,” said Adrian
In addition to presenting IMF’s Monetary and Capital Markets Department latest paper, a distinguished panel moderated by Carolyn A. Wilkins, Senior Deputy Governor, Bank of Canada; and comprised of Richard H. Clarida, Vice Chair, Board of Governors of the Federal Reserve System; Philip R. Lane, Chief Economist and Member of the Executive Board, European Central Bank; joined Tobias Adrian in discussing if new policy frameworks spur faster recoveries and help central banks deliver on their mandates, and if “lower-for-longer” policies pose risks to financial stability.
To watch the full event, click here