Klaas Knot: The quest for policy scope - implications for monetary policy strategies

Speech by Mr Klaas Knot, President of the Netherlands Bank, at the fourth annual high-level conference "Racing for Economic Leadership: EU-US Perspectives", New York City, 16 October 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

In New York, at the 4th annual high-level conference on EU-US perspectives, Klaas Knot participated in a session "The Quest for policy scope". Mr Knot highlighted implications for monetary strategies, by discussing how longer-term changes in the global economy continue to create important challenges for monetary policy. These challenges have gained in relevance over time. They should be important elements of future reflections on monetary policy strategy.

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More than a decade after the Global Financial Crisis erupted, inflation in the euro area has still not reached the ECB's aim of below, but close to, 2%. This despite unprecedented conventional and unconventional monetary easing and five years of economic expansion. Moreover, market-based indicators of long-term inflation expectations in the euro area have fallen, fueling concerns that the anchoring of inflation expectations may have weakened.

Against the backdrop of a weakening global economy and heightened geopolitical risks, these concerns prompted the ECB to take further measures to boost inflation at its September meeting.