Monetary policy in uncertain times

50^th OeNB Economics Conference and 60^th SUERF Anniversary Conference

“Monetary policy in uncertain times: Towards robustness and resilience” – this is the title of a two-day conference hosted by the Oesterreichische Nationalbank (OeNB) and SUERF – The European Money and Finance Forum on May 22 and 23. The conference will bring together more than 30 leading experts from central banks, the world of finance and academia from around the world. Together, they will explore the different aspects of the conference topic – in person at the Vienna MuseumsQuartier or online via Webex.

In the early 2020s, as several central banks were reassessing their monetary policy strategies, the main question was how to deal with inflation that had been persistently below target. Today, the picture has changed. As inflation rates now clearly exceed their 2% target, monetary policymakers are confronted with a whole new set of questions: Were the analyses made at the time overly focused on a particular state of the world? Are the results of these analyses robust to the possibility of dramatically and fast-changing circumstances? Recent events on the financial markets have additionally fueled uncertainty and volatility. We have once more seen how large and sudden shocks can dramatically change economic and financial conditions in a matter of months, not only locally but also globally.

Against this background, the OeNB/SUERF conference aims to provide a forum for critically examining strategies pursued by central banks in the past and answering the question if monetary policymakers can adequately react to unexpected changes in economic conditions. Likewise, the robustness and resilience of analytical instruments available in the monetary policy tool kit must be examined in these terms. In times of high inflation and considerable uncertainty, we must also pay attention to communication. We need to discuss sensitive and targeted communication on the part of monetary policymakers, as it is key for stability.

This year’s conference will bring together more than 30 policymakers from central banks and financial institutions around the world to discuss these aspects and current challenges with researchers. The conference will be opened by OeNB Governor Robert Holzmann and SUERF President Jakob de Haan in the afternoon of Monday, May 22, 2023. The opening keynote will be delivered by Markus Brunnermeier, Professor of Economics at Princeton University, who will talk about robustness and resilience in an uncertain and complex world and their implications for monetary policy. In a subsequent panel discussion moderated by Ernest Gnan (SUERF Secretary General), Sandra Eickmeier (Deutsche Bundesbank), Raffaella Giacomini (Federal Reserve Bank of Chicago), Boris Hofmann (Bank for International Settlements – BIS) and Adrian Penalver (Banque de France), will discuss shock identification and optimal monetary policy responses in an uncertain and complex environment.

Monday’s program will end with a high-level policy panel that will explore optimum responses by central banks in highly volatile times. Governeur Holzmann will chair the discussion with Tobias Adrian (Financial Counsellor and Director, Monetary and Capital Markets Departments, International Monetary Fund), Claudio Borio (Head of the Monetary and Economic Department, BIS and SUERF Fellow), Sarah Breeden (Executive Director, Bank of England) and Philip Lane (Member of the Executive Board, European Central Bank – ECB). At the close of the day, Philipp Hildebrandt (Vice Chairman, BlackRock) will deliver a dinner speech, providing an investor’s perspective on how to deal with extreme uncertainty in an interconnected world.

Day 2 of the conference (May 23, 2023) will start with two academic sessions on current core topics. Out of a number of excellent submissions, nine outstanding papers were chosen on two topical subject areas. Academic session 1 will include five presentations focusing on the dynamics of price- and wage-setting and the role of expectations for monetary policy decisions, moderated by Fabio Rumler (Senior Principal, OeNB). Academic session 2, moderated by Claudia Kwapil (Senior Principal, OeNB), will include four presentations exploring the transmission of monetary policy and the implementation of monetary policy in an uncertain environment.

In the afternoon, session 2 will deal with the complex implications and coordination problems that may arise from the interaction of fiscal and monetary policy. Moderated by María T. Valderrama (Head, Monetary Policy Section, OeNB), these issues will be discussed by Dennis Bonam (Principal Economist, De Nederlandsche Bank), Sven Lagedijk (Advisor, Directorate-General for Economic and Financial Affairs, European Commission), Aaron Mehrotra (Principal Economist, BIS) and Francesco Papadia (Senior Fellow, Bruegel).

This will be followed by a keynote address moderated by OeNB Vice Governor Gottfried Haber and delivered by Jon Danielsson (Director, Systemic Risk Centre, The London School of Economics and Political Science), who will explore the role of central banks as risk managers and the associated implications. The final session on day 2 will address monetary policy communication in uncertain times, a topic that will be discussed by Klodiana Istrefi (Senior Economist, ECB), Michael McMahon (Professor of Economics, University of Oxford), Emanuel Moench (Professor, Frankfurt School of Finance & Management) and Kilian Rieder (Principal Economist, OeNB, and SUERF Research Associate). Moderated by Birgit Niessner (Director, Economic Analysis and Research Department, OeNB), the discussion will explore what robust central bank communication might look like in uncertain times and what credibility issues may arise.

The conference will be wrapped up with concluding remarks by OeNB Vice President Barbara Kolm.