Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the 25th Jacques Polak Annual Research Conference

Washington, D.C., 14 November 2024

Over the past few years, monetary policy has had to change course in an unprecedented way. Faced with persistently low inflation, central banks in many advanced economies had lowered policy rates to record low levels and bought significant amounts of assets to bring inflation back to target.

When the pandemic hit and inflation surged as our economies reopened, central banks responded by raising policy rates sharply to restore price stability and anchor inflation expectations. They also started to gradually reduce their balance sheets, further removing policy accommodation.

Although the fight against inflation has not yet been won, with domestic price pressures remaining high, it is time for central banks to start reflecting on the lessons that can be learned from these episodes of low and high inflation.

My main message today is…