Christine Lagarde: Policymaking in an age of shifts and breaks

Speech by Ms Christine Lagarde, President of the European Central Bank, at "Structural Shifts in the Global Economy", an economic policy symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, 25 August 2023.

Central bank speech  | 
30 August 2023
PDF full text
 |  12 pages

Over the past three years, people around the world have experienced an unprecedented series of shocks, albeit to varying degrees.

We have faced the pandemic, resulting in a partial shutdown of the global economy. We are confronting a war in Europe and a new geopolitical landscape, leading to profound changes in energy markets and trade patterns. And climate change is accelerating, compelling us to do all we can to decarbonise the economy.

One visible impact of these shifts has been the return of high inflation globally, which has caused anguish for many people. Central banks have responded by tightening monetary policy and, while progress is being made, the fight against inflation is not yet won.

But these shifts could also have profound longer-term implications. There are plausible scenarios where we could see a fundamental change in the nature of global economic interactions. In other words, we may be entering an age of shifts in economic relationships and breaks in established regularities. For policymakers with a stability mandate, this poses a significant challenge­.