Monetary Policy in Search of a New Normal

The financial crisis and the tools used to overcome it have disrupted received wisdom about monetary policy, which is now in search of a new normal. And will be the topic of a conference at Bocconi tomorrow, 14 April: Central banking and monetary policy: Which will be the new normal?, jointly organized by Baffi Carefin Centre for Applied Researchon International Markets, Banking, Finance and Regulation, and Suerf, The European Money and Finance Forum, an association of professional economists, financial practitioners, central bankers and academics.

"Traditional monetary policy used to be based on three pillars", says Donato Masciandaro, Director of Bocconi's Department of Economics and a member of SUERF's Council of Management: "A goal, measured in terms of inflation; a tool, interest rates; an independent actor such as the central bank. In the last years, though, goals have been expressed also in terms of growth and financial stability, while the desired inflation rate has been criticized both as too stringent and as too weak. From 2014 onwards the tool used by central banks has evolved into an arsenal. Even independence has been debated: if central banks' actions have non-monetary effects, governments think they can play a role".

In the conference, international academics will discuss the topic along with Bank of Italy's Deputy Governor, Fabio Panetta.