jan smets : new data needs for monetary policy speech by mr jan smets, governor of the national bank of belgium, at the ninth european central bank conference on statistics, session 1 : new data needs for monetary policy, frankfurt am main, 11 july 2018. * * * reflections on the future of monetary policy may require new data needs i would like to thank the organisers for inviting me to this most interesting conference, and especially this particular session as it really is about the interactions between statistics and the future of monetary policy, a hotly debated topic. some important ( and interrelated ) things have been happening over the last decade or so in the monetary policy landscape. not only have central banks broadened their toolkit to tackle the financial crisis but also the economic world has been faced with structural changes. besides, both the use of new instruments and the availability of new data have spurred advances in monetary policy research. the interplay of these phenomena could potentially have serious implications for the way we think about monetary policy going forward, be it in terms of objectives, instruments, transmission channels or data monitoring. but – and that is the message i want to convey here – to avoid drawing overly hasty conclusions, this requires careful reflection and, in some cases, implies new data needs. only after careful investigation of the issues at stake, can lessons for the future of monetary policy be drawn. in my remarks today, i will focus more specifically on three phenomena that challenge our traditional thinking about monetary policy : first, the role played by heterogeneity – which has been clearly demonstrated by the use of new monetary policy tools ( typically more targeted ) and something which is increasingly documented in economic research and data. second, digitalisation – probably one of the most notable structural economic changes over the last few years – which also opens the door to a new world of data. third, the changing role of the financial sector. i intend to raise a number of questions to foster the debate and hopefully help to structure our thinking. “ how exactly have these challenges called into question the consensus on which monetary policy has been based? how can new data help to identify whether – and to what extent – the practice of monetary policy has changed? more speculatively, can new data help shape a possible " new normal " for monetary policy? ” needless to say, i do not want to provide any definite answers to these key questions ; they have far - reaching implications making it unrealistic to settle all these issues

will be how to translate the findings from new data into concrete policy implications. after all, the micro evidence has to add up to policy advice for monetary policy which is a macro policy with a rather limited set of instruments. therefore, in some cases, other policies – such as macro - prudential, fiscal or structural policies – could be more appropriate for tackling the challenges that new data reveal. thank you for your attention. 1 liquidity - constrained households are indeed unable or unwilling to borrow against the future rise in income that the promise of low rates underpins ( kaplan et al. ). according to lenza and slacalek, the effects of qe and unconventional monetary policy on income via lower unemployment ( benefiting the poor ) are more significant than the effects of high prices for financial assets ( benefiting the wealthy ). 3 globalisation is another structural phenomenon that has the potential to influence our thinking about monetary policy – a view the bis often emphasises – and which could also have implications for what data to monitor. as claudio borio from the bis suggests, many of the issues surrounding digitalisation could apply in a somewhat similar way for globalisation as well ( i refer to his “ through the looking glass " speech from 2017 ). 4 / 4 bis central bankers'speeches