, i have underlined some of the challenges facing monetary policymakers in the current postpandemic and energy - crisis environment. if we keep an open mind and continue learning the lessons of this new environment, i ’ m confident that we will be able to get our policy right – or if not always right, then at least as little wrong as possible – in the tough times going forward. and research, of course, will have an essential role to play in and contribute to this constantly evolving policy process. with these words, let me wish you a very productive and fruitful conference. thank you for your kind attention. olli rehn ( / en / other - pages / tag - search /? tag = olli rehn ) governor ( / en / other - pages / tag - search /? tag = governor ) speech ( / en / other - pages / tag - search /? tag = speech ) in ation ( / en / other - pages / tag - search /? tag = in ation ) monetary policy ( / en / other - pages / tag - search /? tag = monetary policy )

matti vanhala : challenges for finnish economic policy in an unstable international environment abstract of a speech by mr matti vanhala, governor of the bank of finland, at the conference “ monetary policy in 2004 ”, helsinki, 9 october 2003. * * * global economy it would appear that global economic recovery is under way at last. the latest economic data from the united states is more convincing, and economic activity in asia is relatively brisk. economic developments in russia also deserve a mention, and there is a sense of improved optimism both in europe and the euro area as a whole. it therefore seems likely that we will obtain robust growth figures on a global level in the near future. why, then, do i then refer to an ” unstable international environment ” in the title of my speech? the reason is that despite the favourable short - term outlook, sustainable recovery is being affected by a number of uncertainties. global economic expansion is starting to gather speed in exceptionally unstable circumstances. extremely strong expansionary fiscal and monetary policies are the lifeline of industrial countries. although such strong expansionary measures can set recovery in motion, they alone do not create sustainable growth. euro area monetary policy confidence indicators show that euro area companies ’ expectations on economic activity have improved significantly. concerns over deflation have receded, and inflation expectations have stabilised. in light of this, the stance taken by the ecb ’ s monetary policy is lax. euro area central banks are now offering money at the lowest rate ever in the history of open financial markets. furthermore, banks ’ real lending rates are also extremely low. there is no evidence, nor are there any indications, to suggest that the price of financing would prevent investments in any of the euro area countries. expansionary fiscal policy measures are not the answer to euro area problems the failure of one or several euro area countries to pursue sustained fiscal policies that have been accommodated to given cyclical conditions is a very serious matter. although adverse effects will be felt throughout the monetary union, the most severe consequences arising from a strong deterioration of public finances will be caused to the countries themselves. public finances, within the problematic countries, should be stabilised within a reasonable time span by introducing a fiscal policy geared to restrict the growth of public spending. where this can be achieved, the stability and growth pact has worked the way it was intended. however, it has also been suggested that the present uncertain economic situation requires fiscal policy measures in euro area countries that are expansionary in nature. references have