Monetary policy in the 21st century: lessons learned and challenges ahead

Speech by Mr Claudio Borio, Head of the Monetary and Economic Department, on the occasion of the Bank's Annual General Meeting, Basel, 30 June 2024.

BIS speech  | 
30 June 2024

Since the beginning of the century, monetary policy has gone through a tumultuous journey. This journey holds lessons for what monetary policy can and cannot achieve – its power and limitations – and for how it might be refined to face challenges ahead. We draw five lessons, which concern its ability to prevent transitions from low- to high-inflation regimes, its ability to stabilise the financial system during crises, the impact of prolonged and intense easing, communication, and the role of complementary tools such as FX intervention and macroprudential measures. The refinements concern how best to assure price and financial stability and they rely on the importance of five considerations: robustness, realism in ambition, safety margins, nimbleness and, more broadly, coherence across policy domains.

Presentation slides