Fabio Panetta: Mind the gap(s): monetary policy and the way out of the pandemic

Speech by Mr Fabio Panetta, Member of the Executive Board of the European Central Bank, at an online event organised by Bocconi University, Milan, 2 March 2021.

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

It is a great pleasure to be back at Bocconi and share with you my views on the current economic situation.

The year ahead will present macroeconomic policymakers with critical choices.

In 2020, with the pandemic raging, the direction of policy support was obvious and the choices facing policymakers were relatively narrow. Monetary and fiscal authorities everywhere intervened to support the economy on a massive scale.

But in 2021, with the progress made on vaccine technology, policy choices have become less clear-cut. We face a situation in which the end of the pandemic emergency is in sight and an incipient recovery is on the horizon. As such, it might be tempting to conclude that there is less need for monetary policy support.