francois villeroy de galhau : five lessons learned for monetary policy from the latest years remarks by mr francois villeroy de galhau, governor of the bank of france, at the paris school of economics, in discussion with olivier blanchard, paris, 28 june 2023. * * * looking at the last three years, which were rich in unexpected events, i would risk two general lessons, and three more technical ones : 1. the first is that we must remain modest, humble : monetary policy is not omnipotent ; it cannot be the only game in town. and we must be nimble, able to react to surprises with agility. 2. that said, monetary policy was efficient in preventing deflation during covid - while not creating the present inflation. 3. on a more technical note : we certainly should work with less forward guidance. i wouldn't throw it away completely but if we use it again in the future, forward guidance should be ( i ) state dependent and not calendar based except in the very short term ( ii ) indicative and not committing. 4. we should keep our inflation target of 2 %. it served us well, explaining in part why inflation expectations remain rather well anchored ; we shouldn't change it, while keeping in mind that the target is for the medium term. 5. transmission lags are a key question, and we should dig more into this issue. in my view, transmission of monetary policy in this cycle is not weaker but slower, for three reasons : the starting point : the balance sheet of corporates as well as of households was very strong after the exceptional covid support ; fixed rate mortgages have significantly increased in share, and are now predominant in many jurisdictions. it's nevertheless good news for financial stability ; the higher proportion of services in the economy, which are less directly sensitive to interest rates. non - housing services now represent 49 % of core hicp basket in the euro area, compared with 41 % in 2001. in a recent speech, 1 i suggested that the lag could be up to two years. hence, " length " is still more important than " level ", to quote the two dimensions mentioned by christine lagarde recently2. we stated in our last monetary policy statement that " the key ecb interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2 % medium term target and will be kept at those levels as long as necessary ".

delisle worrell : challenges facing caribbean economists opening remarks by dr delisle worrell, governor of the central bank of barbados, at the annual monetary conference, bridgetown, 15 november 2011. * * * the annual monetary studies conference ( amsc ) is now well established. it is the leading conference of caribbean economists and economists working on the caribbean. the quality of research and presentation at this conference is uniformly high, and the meeting offers the best opportunity caribbean economists have for networking. the journal of banking finance and economics in emerging economies, the journal of the caribbean centre for money and finance, offers swift publication of the best papers from this conference. so we can say that amsc is no longer aspirational but a fixture of the caribbean economic landscape. the conference is now challenged to push to the next level. there are 2 aspects of the challenge facing caribbean economists that i would like to see this conference tackle : the need for new ways of conceptualising our economies, and the need to do research that points the way more clearly for policy makers and the public. why do we need new concepts? the conventional analysis gives counter intuitive answers to many of the questions that are of ongoing interest : conventional economics says that flexible exchange rates are better, but the countries with fixed exchange rates are more prosperous ; conventional economics teaches that it is good policy for the central bank to speak out publicly against bad fiscal policy, but in truth public disagreement destroys the credibility of both parties ; conventional economics recommends that to reduce inflation you should raise interest rates, even though higher interest drives up costs ; conventional economics suggests that stock exchanges are a good way to fund investment, even though new issues to fund capital formation have become a rarity. at the moment our research looks pretty much like any other. we used to argue that caribbean circumstances were different, that small open economies ( soes ) were different, and that resource rich and resource poor countries were different. nowadays we use the same models, the same specifications, similar data and the same tests. if you use these methods and you get the same result for barbados, with an economy the size of a small county in an obscure us state, as you get for the entire us, shouldn ’ t you be sceptical? the truth is that economies are so diverse in so many ways that the notion of universal theory is problematic. the simplifications which are the essence of modelling will make sense only if they mirror the essential features of each economy. we need