Isabel Schnabel: Monetary policy in changing conditions

Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the second EBI Policy Conference on "Europe and the Covid-19 Crisis - Looking back and looking forward", Frankfurt am Main, 4 November 2020.

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

Europe is in the midst of the second wave of the coronavirus (COVID-19) pandemic. Rising infection numbers across the euro area have made new far-reaching containment measures necessary to contain the spread of the virus and protect the most vulnerable members of our society as well as our public health systems.

The new measures will again come at significant personal and economic cost. They will slow the path of recovery, increase the risks of long-lasting labour market scarring and ultimately require new fiscal measures to sustain demand and provide relief to those who are least able to bear the burden of the crisis.

Since the start of the pandemic, monetary policy has contributed to mitigating the social and economic costs of this crisis. In the euro area, the ECB has taken quick and decisive action to provide stability in financial markets, reduce borrowing costs and safeguard the supply of credit.

In my remarks this afternoon, I will explain the ECB's response to the coronavirus crisis in more detail. I will start by briefly recalling the measures that the Governing Council took in response to the first wave of infections in spring. I will then discuss how the situation today differs from the situation we were facing in spring and the challenges monetary policy has to confront in the current environment.