speech monetary policy and the great volatility speech by isabel schnabel, member of the executive board of the ecb, at the jackson hole economic policy symposium organised by the federal reserve bank of kansas city, jackson hole, wyoming jackson hole, 27 august 2022 the great moderation was a period of prosperity and broad macroeconomic stability. [ 1 ] the volatility of both inflation and output declined, the length of economic expansions increased, and people in most economies experienced sustained improvements in their standards of living. there is broad agreement that better monetary policy was an important factor behind the great moderation. [ 2 ] as central banks took up the fight against spiralling inflation in the late 1970s and early 1980s, they brought down and stabilised inflation expectations at levels that provided a solid nominal anchor for firms and households. the subsequent advance of inflation targeting around the world is believed to be a prime reason why the global financial crisis of 2008 merely interrupted the great moderation. [ 3 ] afterwards, macroeconomic volatility quickly dropped back to its previous low levels. yet, monetary policy was not the only factor behind the great moderation. good luck, in the sense of a smaller variance of the shocks hitting the global economy, is widely believed to have played an important role as well. [ 4 ] compared with the 1970s, for example, real oil prices traded in a much narrower range from the second half of the 1980s until the mid - 2000s. the question i would like to discuss this morning is whether the pandemic, and more recently russia ’ s invasion of ukraine, will herald a turning point for macroeconomic stability – that is, whether the great moderation will give way to a period of “ great volatility ” – or whether these shocks, albeit significant, will ultimately prove temporary, as was the case for the global financial crisis. my answer to this question is that of a “ two - handed economist ”. on the one hand, there is a tangible risk that the nature and persistence of the shocks hitting our economies will remain unfavourable over the coming years. on the other hand, the decisions that central banks are taking today to deal with high inflation can shape the future course of our economies in a way that mitigates and limits the ultimate impact of these shocks on prosperity and stability. a new era of volatility the pandemic and the war in ukraine have led to an unprecedented increase in macroeconomic volatility. output growth

jean - claude trichet : interview with de tijd and l ’ echo interview by mr jean - claude trichet, president of the european central bank, with de tijd and l'echo, belgium, conducted by messrs wouter vervenne, wouter vandriessche, marc lambrechts, luc charlier and serge quoidbach on 4 december 2009 and published on 10 december 2009. * * * is the euro area now definitely out of recession? if so, will the expected recovery be sufficiently strong to create jobs? jean - claude trichet : the second quarter of this year saw the end of the period of free fall in terms of growth. this very difficult period lasted two full quarters following the intensification of the crisis in mid - september 2008 ( editor ’ s note : following the collapse of lehman brothers ). as of the third quarter of 2009 we have been experiencing positive growth again. this will be the case in the fourth quarter, too. according to the projections of the eurosystem staff, average growth next year should also be positive, albeit still modest. and with a level of uncertainty – and i should like to stress this point – that remains very high. this is related to a number of factors, primarily international. as regards employment, taking into account the “ lags ” usually observed after periods of recession, we could see an increase in unemployment even with growth rates returning to positive territory. we must therefore act with determination to strengthen confidence. indeed, it was confidence that was so dramatically lacking following the events of september 2008. all of our actions today within the governing council of the ecb are aimed at strengthening the confidence of households and firms in the medium term. were you aware that this confidence would be so difficult to re establish? in a cycle such as this, the decline is often much steeper than the recovery, which is slower. hence the importance, for us, of : ( i ) assuring our fellow citizens that we are able to ensure price stability and thereby defend their purchasing power ; and ( ii ) convincing firms that the financial environment will continue to incorporate a low level of inflation in the years to come, which will be reflected in medium and long - term market interest rates. last thursday the ecb announced the progressive phasing - out of its extraordinary measures. does this mean that market conditions are now completely back to normal? moreover, analysts view the details announced for the 12 - month refinancing