. the prolonged proximity of interest rates to the elb was at the heart of the monetary policy review and the changes we made to our framework in 2020. we will begin our next five - year review in the latter half of 2024 and announce the results about a year later. among the questions we will consider is the degree to which the structural features of the economy that led to low interest rates in the pre - pandemic era will persist. with time, we will continue to learn from the experience of the past few years, and what implications it may hold for monetary policy. these are just three of the many questions raised by these challenging times, and we are far from a complete understanding of the answers. i appreciate the opportunity to discuss these issues with you today and look forward to our conversation. opening remarks jerome h. powell chair board of governors of the federal reserve system at “ monetary policy challenges in a global economy, ” a policy panel at the 24th jacques polak annual research conference, hosted by the international monetary fund november 9, 2023

the global financial crisis on the economy and, potentially, on price developments has been unprecedented. we have taken unprecedented measures in response, aiming pre - emptively and forcefully to avert risks to price stability, in accordance with our primary mandate. first, we have reduced our key interest rate to 0. 75 %, a level previously unseen in virtually all euro area countries. the interest rate in the overnight interbank market is now even lower, close to zero. second, we have acted to prevent an abrupt reduction in the supply of credit to the real economy. we have given banks unrestricted access to central bank funding in all our refinancing operations. we have extended significantly the average maturity of these operations. we have broadened the set of eligible collateral. this assurance of funding to banks has prevented disorderly deleveraging in the financial sector and averted a collapse in money and credit, with potentially severe implications for price stability, and thereby employment and growth. all these decisions have ensured price stability and stabilised inflation expectations during an exceptional period. naturally, the ecb is aware of the challenges arising from a protracted period of low policy rates and ample liquidity. let me elaborate on the three main challenges. bis central bankers ’ speeches the first is that low interest rates may affect the ability of savers and investors to generate returns. this is especially the case for institutions targeting nominal returns, such as insurance companies and pension funds. yet, by ensuring price stability throughout the crisis, monetary policy has contributed to more stable financial conditions. this is central to the interests of savers and investors : there can only be sustainable returns in a stable environment. the second challenge relates to incentives. a protracted period of low interest rates and ample liquidity facilitates rolling - over loans at very low costs. banks may therefore have less incentive to monitor credit risk properly and may provide too many loans to non - profitable business. over time, such misallocation of financial resources would undermine overall productivity and depress growth and employment. the third challenge is that protracted monetary accommodation may fuel bubbles in house prices and other asset markets. as the crisis has painfully demonstrated, the bursting of such bubbles inflicts large costs for the real economy. in this context, a natural question is whether monetary policy should be used actively to contain asset price booms and bubbles – a response known as “ leaning against the wind ”. thanks to our monetary policy strategy, implicitly we do this to some extent. we