Ben Broadbent: Government debt and inflation

Speech (via videolink) by Mr Ben Broadbent, Deputy Governor for Monetary Policy of the Bank of England, at the 2020 Annual Meeting of the Central Bank Research Association, London, 2 September 2020.

Central bank speech  | 
03 September 2020

Good afternoon. Thank you for asking me to speak to you today. This is an important and innovative time for central banks, across their many functions, and it's vital we learn from our own and others' research on the big questions. The Bank of England launched its new Agenda for Research1 yesterday and Andy Haldane will I'm sure want to tell you more about it in the panel following this talk.

The topic I've chosen today certainly isn't a new one. In fact, it's almost as old as economics itself. I want to talk about "monetary finance" - what it is (and what it is not), what it's worth and when it's been used in the past.

Old it may be, but there's been quite a bit of talk about this topic very recently. In the face of the global pandemic governments have taken significant fiscal actions to maintain incomes and preserve economic capacity. At the same time, central banks have aggressively eased monetary policy. Because these things have occurred alongside each other some commentators have suggested that central banks are engaged in "monetary finance" of government deficits.