Klaas Knot: Monetary policy in the face of the Corona pandemic

Introductory remarks by Mr Klaas Knot, President of the Netherlands Bank (DNB), at the UBS European Conference, online, 10 November, 2020.

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

At the UBS European Conference today Governor Knot spoke about the economic outlook as we have entered the second wave of the pandemic. Next, he drew lessons for the policy response based on crisis experiences.

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The changing environment

· We are currently living through the second global crisis – and the third major crisis in Europe – in less than a generation. And again, uncertainty is huge.

· The Corona crisis hit at a time when important developments have been changing the macroeconomic, financial and policy landscape.

o In the global economy, we have witnessed a falling natural rate of interest, lower trend inflation, and further globalization and technological progress.

o In the financial area we have seen high debt levels and leverage, a large role of central banks in financial intermediation, and a high demand for safe assets.

o On the policy front, the past years were marked by non-standard monetary policy, macroprudential policy, and active fiscal policy.