Speech by Agnès Bénassy Quéré to the European Economic Association on the policy mix

Her speech was an opportunity to highlight the fact that the multiplication and diversity of supply shocks, as well as the reduction in fiscal leeway, are making the policy mix more complex. When the euro was introduced, the policy mix assumed that there would be no supply shocks. Today, the resurgence of shocks (Covid, energy prices, geopolitical conflicts) implies a trade-off between price stability and output stability and a fine-tuned fiscal response - using a wide range of tools. 
  
The main challenge for the future will be to understand climate risk, which is broken down into physical risks and transition risks that could result in greater inflation volatility, at a time when fiscal stabilisation capacities are being eroded and governments are focusing on financing the energy transition. Against this backdrop, monetary policy will have to be active to limit price uncertainties and thus foster long-term savings and favourable long-term interest rates.

Find the Agnès Bénassy-Quéré's presentation