Philip R Lane: Monetary policy during the pandemic - the role of the PEPP

Speech by Mr Philip R Lane, Member of the Executive Board of the European Central Bank, at the International Macroeconomics Chair Banque de France – Paris School of Economics, Paris, 31 March 2022.

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

Introduction

It is a pleasure to speak to you here today. While delivering this lecture in person rather than online is a reflection of the declining public health impact of the pandemic (the current high infection rate notwithstanding), the step-by-step transition to the new normal is currently being overshadowed by the Russian invasion of Ukraine. This war not only confronts us with the immediate implications of a war in Europe, but also constitutes a tectonic shock to the global geopolitical and economic order. Above all, the Governing Council of the ECB expresses its full support to the people of Ukraine. We will ensure smooth liquidity conditions and implement the sanctions decided by the European Union and European governments. We will take whatever action is needed to fulfil the ECB's mandate to pursue price stability and to safeguard financial stability.

Turning now to the main focus of this lecture, this is a milestone week: the end of March marks the conclusion of ECB net asset purchases under the pandemic emergency purchase programme (PEPP). This is a good moment to review the conduct of monetary policy during the pandemic, with a primary focus on the PEPP. In addition to this review, I will also discuss the current challenges for monetary policy.