Isabel Schnabel: Navigating inflation and employment in an era of supply shocks and AI
Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the 2026 US Monetary Policy Forum, New York City, 6 March 2026.
The views expressed in this speech are those of the speaker and not the view of the BIS.
Presentation accompanying the speech
The post-pandemic inflation surge placed severe strain on our societies, fuelled political frustration and amplified institutional distrust. It also hit the most vulnerable hardest – those with low incomes and without real assets.
But although the scars of this episode are still visible, pressure is building on central banks around the world to shift their focus away from inflation and towards growth. These calls are emerging at a time when central bank independence is under mounting pressure and fiscal consolidation is being constrained by deep political polarisation.
In the euro area, these arguments are sometimes framed as a push for a dual mandate, urging the ECB to place greater weight on employment alongside price stability, often drawing explicit comparisons with the Federal Reserve's statutory objectives.
In my remarks today, I will argue that a dual mandate rarely leads to fundamentally different policy prescriptions. In a world marked by more frequent supply-side shocks, the main challenge of central banks, regardless of their mandate, is to preserve a credible commitment to price stability.
I will also draw lessons for monetary policy today and discuss the implications of the rise of artificial intelligence (AI), which could boost productivity and help ease the supply-side constraints arising from reduced immigration and demographic ageing.