john iannis mourmouras : monetary policy and global capital markets - an update address by professor john iannis mourmouras, deputy governor of the bank of greece, at the launch of the second edition of his book at the nyu stern school of business, new york city, 28 september 2018. * * * introduction dear vice dean, dear president barroso, dear governor king, distinguished panellists and esteemed professors of nyu, yale and princeton, ladies and gentlemen, i am very delighted to be here at nyu. i would like first of all to thank stern business school for hosting my book launch event and all the team who worked and made this happen. i am truly honoured by the presence of prime minister barroso, a true european statesman with a long tenure as president of the european commission, the government of the european union, who left his mark on europe in unprecedented and difficult times. he personally worked hard to keep my country within the eurozone, quite often at a personal cost for him against stiff opposition by a number of core european countries. president barroso, the whole greek nation, including myself, will always be grateful to you for this. the presence of such a strong panel is a great honour for me as a central banker and academic. professor the lord king, one of the world ’ s leading central bankers of modern times, among only a handful, still sets the standards high for all those involved with global monetary affairs, wellknown also for his passion for cricket! both these two distinguished gentlemen, barroso and king, have something in common : their common feature, although one was in politics and the other in central banking, is, by pure coincidence, that they both held the top position in their field for two full successive terms, a total of ten years each, barroso from 2004 to 2014, and king from 2003 to 2013, in the same turbulent period. history pays tribute not only to achievements, what one has done after all during one ’ s tenure, but also to the longevity of one ’ s time in office. i would also like to thank professor robert engle for finding time to be here with us, a leading figure in finance, a nobel laureate who has rightfully gained a place in the pantheon of great men and women in economics for his work of modelling time - varying volatility, his famous arch model is used extensively not only by academics, but also by analysts of financial markets who use it in asset pricing and

in evaluating portfolio risk. and of course, i am very grateful to the two colleagues, one from finance and one from economics, professor richardson and professor white, both distinguished experts in their respective fields, for being here today. i will focus only on monetary policy and capital markets. i fully subscribe what president barroso said in his opening remarks on european developments. he said it all! instead, i will make a short reference to my own country, greece. this is a fortunate moment for my country. after 8 years of hardship and 3 adjustment programmes, greece is emerging with renewed optimism from this difficult time and is finally returning to european normality. 1 / 5 bis central bankers'speeches a. monetary policy global economic activity in advanced economies has expanded in a robust manner in recent years, however, due to a persistently low inflation, most of the unconventional tools of monetary policy are more or less still in place, especially in europe. to give you an idea of the extraordinary circumstances that we experienced since 2008, in britain, the bank of england ’ s base rate had historically remained above 2 per cent for 315 years, from its foundation in 1694 until 2009. it was in response to the severity of the crisis that governor king had to cut the base rate below 2 per cent and to take it even to the level of half a percentage point in march 2009 in an mpc meeting which also launched the boe ’ s qe programme ( amounting to $ 575 billion or 22 % of the uk ’ s gdp ). today, although much of the excitement comes from the uncertainty surrounding the timing of the expected rate hikes by the fed, and developments in emerging economies ( argentina, turkey, etc. ), i propose to focus, as a eurosystem central banker, on ecb ’ s monetary policy. the global monetary policy outlook continues to diverge. at one end of the spectrum is the us federal reserve, which is likely to continue to tighten policy ( only two days ago we had another quarter rate hike ) ; at the other end, is the people ’ s bank of china, likely to keep gradually easing monetary conditions, and the bank of japan, which is expected to stick to its yield curve control for the foreseeable future. at the same time, the european central bank and the bank of england are somewhere in the middle. both seem to want to normalise policy gradually. in the euro area, following 21 consecutive quarters of expansion, including the