march 2022 2 review, the ecb has highlighted that “ the preparation of monetary policy deliberations will be enhanced with additional information on financial stability considerations. ” while macroprudential policies are and will remain the first line of defence against financial stability risks, we aim at basing our monetary policy decisions on a more systematic assessment of the risks to output and inflation created by the accumulation of financial vulnerabilities, of the extent to which macroprudential measures can mitigate these risks, and of the design features of monetary policy tools that minimise side effects on the financial sector. taking proper account of these financial stability considerations will require the contribution of research along two main dimensions. first, further progress is necessary on the development of macro - financial models capable of underpinning the joint analysis of monetary and macroprudential policies. the global financial crisis of 2007 – 08 spurred a vast research agenda on macro - financial linkages, providing us with new analytical tools to calibrate macroprudential measures and to evaluate their impact. work in this direction should be expanded to build integrated frameworks for the assessment of the 1 / 2 bis central bankers'speeches trade - offs and complementarities between price stability and financial stability over different time horizons, and of the interactions between monetary policy and macroprudential policy. we need to better understand, in particular, the nonlinearities associated with episodes of financial instability, the potential lack of synchronicity between the real business cycle and the typically longer financial cycle, and the extent to which each policy influences the effectiveness of the other. second, we have to expand our knowledge of the impact of monetary policy on the non - bank financial intermediation sector. the share of financial intermediation performed by non - banks has risen sharply over the last few decades at a global level. on one hand, these institutions are increasingly becoming an important channel for the transmission of monetary policy during normal times. on the other hand, they could also seriously threaten its functioning in situations of stress, requiring central banks to turn to extraordinary ( direct or indirect ) interventions, such as those that were implemented in march 2020. non - bank financial intermediaries are not currently subject to a macroprudential framework, nor have explicit access to central bank facilities. understanding how monetary policy measures may affect their behaviour is therefore particularly relevant from a financial stability perspective. several other important issues should also be better investigated. as the balance sheets of banks and non -

klaas knot : inflation strikes back - drivers and policy reactions speech by mr klaas knot, president of the netherlands bank, at the 25th annual dnb research conference " inflation strikes back : drivers and policy reactions ", amsterdam, 10 november 2022. * * * welcome everyone! this is a sight for sore eyes : a whole room full of real - life delegates! a posse of bankers, a pride of economists, a pack of scientists. or whatever the proper collective noun would be for a gathering like this - i only know we are a collective. because we share an interest, a passion, a purpose : we are interested in economic developments. my interest in economics was triggered by the great inflation of the 1970s. i remember my parents'distress about exploding mortgage costs, the fuel coupons, the empty roads on sundays, our concerned prime minister on television warning us that nothing would ever be the same againand i wondered : how on earth could this happen? and, what could be done? how can we prevent this from happening again? so i studied economics, i worked in public policy, i became a central banker. and i learned that economics is not a selfcontained science, there is never one right answer that stays right forever, like in a hard science such as mathematics. as john maynard keynes one said : " the master - economist must possess a rare combination of gifts. he must reach a high standard in several different directions and must combine talents not often found together. he must be mathematician, historian, statesman, philosopher - in some degree. he must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. " that is our challenge : to come up with different ideas, combining different talents and different perspectives, in response to the problems of our times. with a big advantage of our time : economists are not only'he'anymorecoming up with ideas, that is what we, what you, will do during this conference. in answer to the problem of today, because inflation is back. with a vengeance. last october hicp inflation reached 10. 7 percent, with some heterogeneity among euro area countries. here in the netherlands we are experiencing a 16. 8 annual percentage change in the overall level of prices. like in the 1970s, the current high inflation is rooted in energy price shocks, this time as a result of the war in ukraine. however, recent analyses show that supply