Do you remember when monetary policy was boring?
IMF Managing Director Christine Lagarde raised the question in a few light remarks at the opening of a conference, Monetary Policy in the New Normal, at George Washington University.
“It was a bit like walking up and down a staircase, step by step, 25 basis points at a time, each step anticipated by markets,” she recalls.
“Saying you were a central banker at a dinner party was a conversation killer.”
But the world has changed and central bankers have became leading actors in stabilising financial systems and whole economies.
They are constantly in the spotlight.
“There have been exceptional actions and exceptional results,” Lagarde says.
“Without the decisive steps taken by central banks in recent years, the world economy would today be much worse off. A new great depression was avoided.
“Even so, we cannot rest on our laurels. The world is continuing to change. Monetary policy, and central banking, will not go back to what they used to be once the crisis is finally behind us.
“This tumultuous period from which we are beginning to emerge has raised fundamental questions. It has pushed us outside of our comfort zone and forced us to learn.”
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