1 00:00:00,560 --> 00:00:05,040 Speaker 1: I think this conference is an opportunity to foster the 2 00:00:05,080 --> 00:00:09,960 Speaker 1: interaction between female scholars and to strengthen our network. Men 3 00:00:10,000 --> 00:00:12,640 Speaker 1: are pretty good at that. We are not, and we've 4 00:00:12,720 --> 00:00:20,079 Speaker 1: better improve. Hello and welcome to Stephanomics, the podcast that 5 00:00:20,120 --> 00:00:24,000 Speaker 1: brings the global economy to you. Now, I've recently done 6 00:00:24,040 --> 00:00:26,479 Speaker 1: something I've never done before, and I thought it was 7 00:00:26,480 --> 00:00:30,319 Speaker 1: worth sharing. For this week's podcast, I sat down with 8 00:00:30,480 --> 00:00:34,840 Speaker 1: three senior policymakers to talk about how central banking could 9 00:00:34,840 --> 00:00:38,240 Speaker 1: make the world a better place. And the senior policymakers 10 00:00:38,240 --> 00:00:42,640 Speaker 1: in question were all women. That panel was part of 11 00:00:42,640 --> 00:00:46,239 Speaker 1: a special conference on macroeconomics and finance co sponsored by 12 00:00:46,240 --> 00:00:49,720 Speaker 1: the European Central Bank and the European think tank, the 13 00:00:49,760 --> 00:00:53,560 Speaker 1: Center for Economic Policy Research, and it wasn't so different 14 00:00:53,600 --> 00:00:57,840 Speaker 1: from other academic conferences I've been to, interesting cutting edge 15 00:00:57,840 --> 00:01:01,240 Speaker 1: papers on topics like the impact of monetary policy on 16 00:01:01,400 --> 00:01:05,479 Speaker 1: racial inequality or whether low interest rates make the economy 17 00:01:05,560 --> 00:01:09,080 Speaker 1: less efficient. While they were interesting to me anyway, the 18 00:01:09,160 --> 00:01:12,400 Speaker 1: only thing that was different about this super brainy conference 19 00:01:12,880 --> 00:01:16,040 Speaker 1: was that every single one of the contributing speakers was 20 00:01:16,080 --> 00:01:20,720 Speaker 1: a woman. Now, you might not think this kind of statement. 21 00:01:21,240 --> 00:01:24,560 Speaker 1: Women's conference was really necessary in this day and age. 22 00:01:24,920 --> 00:01:28,160 Speaker 1: Don't you find senior women economists popping up all over 23 00:01:28,160 --> 00:01:31,240 Speaker 1: the place, But you'd be wrong. As the President of 24 00:01:31,240 --> 00:01:34,920 Speaker 1: the European Central Bank, Christine Legarde explained when she launched 25 00:01:34,920 --> 00:01:39,399 Speaker 1: the event, the twenty twenty report published by the American 26 00:01:39,440 --> 00:01:44,360 Speaker 1: Economic Association shows that women make up only twenty of 27 00:01:44,440 --> 00:01:48,640 Speaker 1: the PhD granting economics faculties in the United States, and 28 00:01:48,760 --> 00:01:51,960 Speaker 1: most of those women do not hold tenure tribal positions. 29 00:01:52,560 --> 00:01:57,560 Speaker 1: And the share of female fool professors is only in Europe, 30 00:01:57,960 --> 00:02:00,360 Speaker 1: and it is estimated that the figure is that we 31 00:02:00,400 --> 00:02:05,640 Speaker 1: have at the moment actually decreased to twelve when considering 32 00:02:05,800 --> 00:02:10,240 Speaker 1: top research institutions and more senior position. So it's not 33 00:02:10,320 --> 00:02:14,080 Speaker 1: a very rosy picture, despite sometimes the impression that we 34 00:02:14,160 --> 00:02:17,760 Speaker 1: have that a lot of progress that has been made. No, 35 00:02:18,320 --> 00:02:23,919 Speaker 1: and this gender imbalances need to be addressed, broadening women's 36 00:02:23,960 --> 00:02:27,480 Speaker 1: participation in the economics profession and removing the obstacles they 37 00:02:27,480 --> 00:02:30,400 Speaker 1: are they face pursuing a career. It's not just a 38 00:02:30,440 --> 00:02:33,119 Speaker 1: matter of fairness, which in and of itself would be sufficient, 39 00:02:35,400 --> 00:02:41,680 Speaker 1: but it's also needed because preventing women from participating and 40 00:02:41,760 --> 00:02:46,480 Speaker 1: achieving leadership roles. It's just detrimental to society as a whole. 41 00:02:47,200 --> 00:02:50,880 Speaker 1: There have been multiple studies pointing to that. A recent 42 00:02:50,960 --> 00:02:54,360 Speaker 1: one by the International Monetary Fund, of course, found that 43 00:02:54,400 --> 00:02:57,080 Speaker 1: the presence of women on the boards of financial and 44 00:02:57,200 --> 00:03:03,280 Speaker 1: supervisory institutions was associated did with greater resilience, less risk taking, 45 00:03:03,760 --> 00:03:08,320 Speaker 1: an increased stability. No, maybe we don't want any of that. 46 00:03:08,520 --> 00:03:12,840 Speaker 1: But I have my hunch that maybe we want stability, 47 00:03:12,960 --> 00:03:15,919 Speaker 1: maybe we want a bit less risk taking, and maybe 48 00:03:15,960 --> 00:03:19,799 Speaker 1: we design greater resilience. And that is the reason why 49 00:03:19,800 --> 00:03:23,520 Speaker 1: it is so important to have events like today's conference, 50 00:03:24,480 --> 00:03:30,120 Speaker 1: not just to advocate and identify obstacles, as I have 51 00:03:30,280 --> 00:03:34,560 Speaker 1: just done, but to show that we mean business and 52 00:03:34,639 --> 00:03:37,560 Speaker 1: the research that we conduct and the policies that we 53 00:03:37,680 --> 00:03:41,640 Speaker 1: recommend and the analytical work that is behind it is 54 00:03:41,680 --> 00:03:48,080 Speaker 1: of superb quality. When we'll demonstrate perfectly that of course 55 00:03:48,120 --> 00:03:53,480 Speaker 1: we can do it, and of course women business. Now, 56 00:03:53,480 --> 00:03:55,960 Speaker 1: as I said, most of the conference was a bit technical, 57 00:03:56,240 --> 00:03:58,240 Speaker 1: but that planel I hosted at the end of the 58 00:03:58,280 --> 00:04:01,120 Speaker 1: first day was on a subject everyone ought to care 59 00:04:01,160 --> 00:04:06,480 Speaker 1: about the social responsibilities of central banks, and the lineup, well, 60 00:04:06,800 --> 00:04:09,640 Speaker 1: it doesn't get much better. You can judge for yourself 61 00:04:09,840 --> 00:04:21,000 Speaker 1: in this edited version of our conversation and enjoy. After 62 00:04:21,040 --> 00:04:28,120 Speaker 1: this great day of academic and path breaking discussion, we 63 00:04:28,240 --> 00:04:31,920 Speaker 1: have a big topic to discuss, how central banks can 64 00:04:31,960 --> 00:04:36,520 Speaker 1: support a new social contract. Now I'm conscious that some 65 00:04:36,640 --> 00:04:38,800 Speaker 1: would say, maybe many would say, that the best way 66 00:04:38,839 --> 00:04:41,080 Speaker 1: for central banks to support a new social contract is 67 00:04:41,120 --> 00:04:44,039 Speaker 1: to keep well clear and to focus just on their knitting, 68 00:04:44,120 --> 00:04:49,359 Speaker 1: on controlling inflation and letting politicians worry about things like society, 69 00:04:49,440 --> 00:04:52,240 Speaker 1: because that's what politicians are elected to do. And if 70 00:04:52,279 --> 00:04:55,520 Speaker 1: our conception of a better social contract in this discussion 71 00:04:55,600 --> 00:05:00,000 Speaker 1: is going to also include an effective response to climate change, 72 00:04:59,520 --> 00:05:02,520 Speaker 1: which suspect it will, I think there are many people 73 00:05:02,880 --> 00:05:05,640 Speaker 1: who have been who have said that central banks should 74 00:05:05,800 --> 00:05:09,560 Speaker 1: keep well clear of that too. But if we've learned anything, 75 00:05:10,400 --> 00:05:14,280 Speaker 1: especially in the response to the global financial crisis in 76 00:05:14,320 --> 00:05:18,560 Speaker 1: the pandemic, it's the central bank policies can have very 77 00:05:18,600 --> 00:05:21,840 Speaker 1: big social and political consequences, whether we like it or not. 78 00:05:22,560 --> 00:05:25,440 Speaker 1: We'll be talking about all of this and much more 79 00:05:25,480 --> 00:05:27,200 Speaker 1: in this session, so let's let me get on with 80 00:05:27,240 --> 00:05:30,600 Speaker 1: introducing them and we can get started. Um. Dr Isabel 81 00:05:30,720 --> 00:05:33,080 Speaker 1: Schnabel has been a member of the European Central Banks 82 00:05:33,080 --> 00:05:37,880 Speaker 1: Executive Board for since the start of She's also been 83 00:05:37,920 --> 00:05:40,560 Speaker 1: a member of the German Council of Economic Experts, and 84 00:05:40,600 --> 00:05:43,159 Speaker 1: I think it is still a professor of financial economics 85 00:05:43,200 --> 00:05:48,240 Speaker 1: at the University of Bonn Baroness minus. Chefik is now 86 00:05:48,360 --> 00:05:51,360 Speaker 1: director of the London School of Economics, having more or 87 00:05:51,400 --> 00:05:54,160 Speaker 1: less run out of senior policy jobs to do. Before that, 88 00:05:54,240 --> 00:05:56,480 Speaker 1: she's served as a Deputy Governor of the Bank of England, 89 00:05:56,520 --> 00:06:01,120 Speaker 1: as senior civil servants at the International Department of International 90 00:06:01,120 --> 00:06:04,040 Speaker 1: Development in the UK, and as senior official at both 91 00:06:04,080 --> 00:06:06,120 Speaker 1: the i m F and the World Bank. She also 92 00:06:06,200 --> 00:06:08,680 Speaker 1: just happens to have written a book What We Owe 93 00:06:08,720 --> 00:06:12,960 Speaker 1: each Other a new social Contract recently, which I suspect 94 00:06:13,040 --> 00:06:16,279 Speaker 1: will will come up in this discussion. And finally we 95 00:06:16,360 --> 00:06:20,080 Speaker 1: have Dr Carmen Reinhardt, very well known to everybody here, 96 00:06:20,160 --> 00:06:23,159 Speaker 1: I know, Chief Economists of the World Bank since last 97 00:06:23,240 --> 00:06:26,920 Speaker 1: year and currently on leave from her position as Professor 98 00:06:26,960 --> 00:06:32,560 Speaker 1: of the International Financial System at Harvard's Kennedy School of Government. Ladies, welcome, 99 00:06:32,680 --> 00:06:37,600 Speaker 1: so glad to be here, Minutia Fik, thank you so much, Stephanie. 100 00:06:37,960 --> 00:06:40,720 Speaker 1: The core Mandate of Central Banks and the best thing 101 00:06:40,760 --> 00:06:43,360 Speaker 1: we can do for the social contract is to deliver 102 00:06:43,880 --> 00:06:46,720 Speaker 1: both price and financial stability, because we all know that 103 00:06:47,000 --> 00:06:50,400 Speaker 1: episodes of high inflation hurt the poor the most, and 104 00:06:50,440 --> 00:06:53,120 Speaker 1: we've seen that in many many countries, and so and 105 00:06:53,440 --> 00:06:56,800 Speaker 1: similarly with episodes of financial and stability because they have 106 00:06:56,880 --> 00:07:00,400 Speaker 1: the least fewest tools to ensure themselves and protect themselves 107 00:07:00,400 --> 00:07:05,679 Speaker 1: from those shocks. But I also think that central banks 108 00:07:05,720 --> 00:07:09,400 Speaker 1: need to be aware of the social consequences of their 109 00:07:09,440 --> 00:07:16,520 Speaker 1: policies and also be aware of how social policies affect 110 00:07:16,600 --> 00:07:19,920 Speaker 1: central banking. And let me just give two examples on 111 00:07:19,960 --> 00:07:25,280 Speaker 1: the first point, how their policies affect social and political consequences. 112 00:07:25,320 --> 00:07:27,880 Speaker 1: There's been a huge debate, as we all know, around 113 00:07:28,320 --> 00:07:33,720 Speaker 1: how recent fairly aggressive monetary policies and quantitative easing have 114 00:07:33,840 --> 00:07:37,400 Speaker 1: affective income distribution, and there's been quite a lot written 115 00:07:37,400 --> 00:07:40,240 Speaker 1: in central banking circles around that. Now we know that 116 00:07:40,280 --> 00:07:43,280 Speaker 1: the effect of monetary policy on income distribution is complex 117 00:07:43,320 --> 00:07:47,360 Speaker 1: and operates through multiple channels. Lower income households are more 118 00:07:47,440 --> 00:07:51,360 Speaker 1: likely to lose their jobs during recessions, and so looser 119 00:07:51,440 --> 00:07:54,280 Speaker 1: monetary policy is likely to increase employment and be good 120 00:07:54,320 --> 00:07:57,800 Speaker 1: for them. On the other hand, richer households tend to 121 00:07:57,800 --> 00:08:00,840 Speaker 1: have more assets and are likely to benefit from loose 122 00:08:01,040 --> 00:08:03,960 Speaker 1: monetary policies through the asset price channel, and so the 123 00:08:04,000 --> 00:08:07,600 Speaker 1: net effect is an empirical question, and it can vary 124 00:08:07,840 --> 00:08:11,120 Speaker 1: across countries and across times. Now, I don't think central 125 00:08:11,120 --> 00:08:13,480 Speaker 1: banks should be setting monetary policy with a view to 126 00:08:13,520 --> 00:08:17,640 Speaker 1: altering income distribution, which is a deeply political thing and 127 00:08:17,640 --> 00:08:20,640 Speaker 1: should be left in the hands of elected politicians. As 128 00:08:20,680 --> 00:08:24,440 Speaker 1: Stephanie implied them from introduction, the central banks should be 129 00:08:24,480 --> 00:08:28,040 Speaker 1: aware of the consequences of monetary policy for income and 130 00:08:28,120 --> 00:08:32,760 Speaker 1: wealth and collect data on these impacts and provide analysis 131 00:08:32,840 --> 00:08:36,199 Speaker 1: to the fiscal authorities so that they are well informed 132 00:08:36,240 --> 00:08:39,880 Speaker 1: and if necessary, can act on that information. They should 133 00:08:39,920 --> 00:08:43,080 Speaker 1: be paying attention to whether their policies have different impacts 134 00:08:43,080 --> 00:08:45,959 Speaker 1: on different groups like women or different parts of a country, 135 00:08:46,400 --> 00:08:50,000 Speaker 1: and again not to alter their policies, but to inform 136 00:08:50,120 --> 00:08:53,880 Speaker 1: those whose mandated is to worry about those issues about 137 00:08:53,880 --> 00:08:56,760 Speaker 1: the potential consequences. Let me give an example of the 138 00:08:56,800 --> 00:09:00,760 Speaker 1: opposite point, which is how do so show and political 139 00:09:00,800 --> 00:09:05,280 Speaker 1: policies affect central banking. One of the most important debates 140 00:09:05,320 --> 00:09:08,240 Speaker 1: we're having these days is you know why the debate 141 00:09:08,280 --> 00:09:12,680 Speaker 1: about secular stagnation. Now we know interest rates or have 142 00:09:12,760 --> 00:09:16,319 Speaker 1: been at historic lose because global savings is high relative 143 00:09:16,320 --> 00:09:19,839 Speaker 1: to global investment. And why are global savings high Because 144 00:09:19,840 --> 00:09:23,959 Speaker 1: people face insecurity and populations are aging, which is why 145 00:09:24,000 --> 00:09:26,400 Speaker 1: of course interest rates are lowest in the parts of 146 00:09:26,400 --> 00:09:29,640 Speaker 1: the world that are aging the most, like Japan and Europe, 147 00:09:30,440 --> 00:09:33,440 Speaker 1: and this results in a tendency to hoard savings, which 148 00:09:33,440 --> 00:09:36,800 Speaker 1: reduces demand for goods and services and slows rates of 149 00:09:36,800 --> 00:09:40,480 Speaker 1: economic growth. And if we had better social insurance, we 150 00:09:40,559 --> 00:09:45,200 Speaker 1: could reduce this risk of secular stagnation. So, for example, 151 00:09:45,679 --> 00:09:50,439 Speaker 1: Chinese households save about thirty of their incomes, in part 152 00:09:50,559 --> 00:09:55,319 Speaker 1: because until recently they didn't have unemployment insurance or health 153 00:09:55,360 --> 00:10:00,240 Speaker 1: insurance or reliable pensions. And so as social insurance is 154 00:10:00,280 --> 00:10:05,199 Speaker 1: increasingly introduced in China, those really high savings rates could 155 00:10:05,200 --> 00:10:08,240 Speaker 1: come down. And on the other side of the equation, 156 00:10:08,320 --> 00:10:11,839 Speaker 1: investment is very low because governments haven't created an environment 157 00:10:12,400 --> 00:10:16,360 Speaker 1: where firms see good opportunities to grow. But many elements 158 00:10:16,400 --> 00:10:19,920 Speaker 1: of the social contract, such as more investment in education 159 00:10:20,520 --> 00:10:25,359 Speaker 1: or infrastructure to reduce carbon emissions, could actually increase demand, 160 00:10:25,480 --> 00:10:30,240 Speaker 1: especially in developing countries where profitable opportunities exist if risks 161 00:10:30,280 --> 00:10:33,840 Speaker 1: can be reduced. And so the problem of secular stagnation 162 00:10:34,480 --> 00:10:37,760 Speaker 1: is not one that central bankers and monetary policy can solve, 163 00:10:38,520 --> 00:10:43,280 Speaker 1: but a better social contract could. And so central bankers 164 00:10:43,360 --> 00:10:47,600 Speaker 1: should be happy to see policies like social insurance or 165 00:10:47,720 --> 00:10:52,600 Speaker 1: support to families and education, or green investment incentives because 166 00:10:52,640 --> 00:10:57,120 Speaker 1: they helped reduce the need for precaution re savings, they 167 00:10:57,240 --> 00:11:00,360 Speaker 1: increase the level of global investment, and they help us 168 00:11:00,360 --> 00:11:04,360 Speaker 1: avoid the risks of secular stagnation. So I would I 169 00:11:04,360 --> 00:11:09,640 Speaker 1: would close that coming right hot. Thank you Stephanie, and 170 00:11:09,720 --> 00:11:13,200 Speaker 1: thank you for for the organizers to to invite me 171 00:11:13,280 --> 00:11:16,800 Speaker 1: to this wonderful event. I also have to say that 172 00:11:17,040 --> 00:11:22,280 Speaker 1: we are well passed the view where you know central 173 00:11:22,280 --> 00:11:28,600 Speaker 1: bankers are uh these suit clad men uh that we 174 00:11:28,720 --> 00:11:32,800 Speaker 1: have typically associated with central banking. Very much thanks to 175 00:11:33,480 --> 00:11:38,160 Speaker 1: Janet Yellen and and and Madame Legarda and of course 176 00:11:38,240 --> 00:11:41,240 Speaker 1: many others around the world. I do want to echo 177 00:11:41,480 --> 00:11:45,439 Speaker 1: very much what we knew should pointed out on on 178 00:11:45,480 --> 00:11:52,479 Speaker 1: the importance of not short changing the mandate of price stability. 179 00:11:53,200 --> 00:11:55,880 Speaker 1: One thing that hasn't been mentioned in the panel is 180 00:11:55,920 --> 00:12:00,600 Speaker 1: that headline inflation does grab. That's why it's called headline 181 00:12:01,200 --> 00:12:05,160 Speaker 1: UH the attention of the public. But at the very 182 00:12:05,280 --> 00:12:12,200 Speaker 1: near nitty gritty level food price inflation, which usually UH 183 00:12:12,360 --> 00:12:17,640 Speaker 1: exceeds headline inflation. In effect, relative food prices tend to 184 00:12:17,760 --> 00:12:24,760 Speaker 1: increase disproportionately, So we can't lose sight that that inflation 185 00:12:24,800 --> 00:12:28,920 Speaker 1: as a whole is extremely regressive. It is regressive for 186 00:12:29,000 --> 00:12:31,400 Speaker 1: many of of the reasons that the panel is have 187 00:12:31,480 --> 00:12:35,160 Speaker 1: pointed out, but I would add that the food dimension 188 00:12:35,480 --> 00:12:39,920 Speaker 1: is critical. I would stress that an important part of 189 00:12:39,960 --> 00:12:45,880 Speaker 1: that social contract is ensuring that the price stability that 190 00:12:45,960 --> 00:12:50,920 Speaker 1: has been achieved UH in central banks, that we should 191 00:12:50,960 --> 00:12:56,040 Speaker 1: not at any moment loose sight of that mandate. UM. 192 00:12:56,080 --> 00:12:59,880 Speaker 1: I would also add that, unfortunately for all of us 193 00:13:00,040 --> 00:13:04,640 Speaker 1: who were economists, economists don't have a great track record 194 00:13:05,320 --> 00:13:09,800 Speaker 1: in predicting turning points, and I think we are at 195 00:13:09,840 --> 00:13:13,120 Speaker 1: a very tough spot here. On one hand, you have 196 00:13:14,000 --> 00:13:21,200 Speaker 1: the concerns that premature tightening would undermine a recovery from 197 00:13:21,280 --> 00:13:26,080 Speaker 1: the worst hit that the global economy to my knowledge, 198 00:13:26,240 --> 00:13:31,320 Speaker 1: has seen. We're coming out of a very exceptional period, 199 00:13:31,400 --> 00:13:36,000 Speaker 1: so there's the concerns of undermining the recovery. But at 200 00:13:36,080 --> 00:13:39,559 Speaker 1: the same time. US inflation rates are at a thirty 201 00:13:39,640 --> 00:13:41,679 Speaker 1: year high. If you look at consumer prices, and if 202 00:13:41,720 --> 00:13:44,960 Speaker 1: you look at producer prices there are forty year high. 203 00:13:45,240 --> 00:13:49,560 Speaker 1: And the concern of acting too late, too little, and 204 00:13:49,600 --> 00:13:53,760 Speaker 1: too late is a very real one. Is a very 205 00:13:53,840 --> 00:13:57,160 Speaker 1: real one. In the aftermath of two thow th nine, 206 00:13:57,160 --> 00:14:00,520 Speaker 1: we were, especially in the advanced economies, not so in 207 00:14:00,559 --> 00:14:06,800 Speaker 1: the emerging markets, we were confronted with massive aggregate demand 208 00:14:07,640 --> 00:14:11,840 Speaker 1: declines UH. In the current context, fast forward to COVID, 209 00:14:12,520 --> 00:14:16,679 Speaker 1: we have both. We are both dealing with exceptional UH 210 00:14:16,800 --> 00:14:21,760 Speaker 1: declines in aggregate demands but also all manner of aggregate 211 00:14:21,800 --> 00:14:27,960 Speaker 1: supply shops. So, and a lesson from the nineties seventies 212 00:14:28,120 --> 00:14:34,600 Speaker 1: that was that central banks ability to stabilize economic activity 213 00:14:35,080 --> 00:14:40,840 Speaker 1: in the face of supply shops is much much much 214 00:14:41,320 --> 00:14:45,800 Speaker 1: to be questioned. UH, it's much more limited. So so 215 00:14:46,080 --> 00:14:48,200 Speaker 1: we also have the danger I said, we have the 216 00:14:48,280 --> 00:14:53,480 Speaker 1: danger of reacting prematurely and the danger of acting too 217 00:14:53,520 --> 00:14:57,120 Speaker 1: little and too late. So it's and and if that 218 00:14:57,200 --> 00:15:01,320 Speaker 1: trade off is not an enviable one in the advanced economies, 219 00:15:01,360 --> 00:15:07,040 Speaker 1: it's even steeper UH in the developed world. In developing world, 220 00:15:07,360 --> 00:15:10,520 Speaker 1: where we've already seen a number of central banks do 221 00:15:10,640 --> 00:15:16,960 Speaker 1: a very aggressive rate heights, and not coincidentally, it very 222 00:15:17,080 --> 00:15:22,040 Speaker 1: much relates to the social unrest that countries like Brazil 223 00:15:22,120 --> 00:15:26,720 Speaker 1: are saying over what are spiraling food and energy crisis. 224 00:15:27,600 --> 00:15:31,120 Speaker 1: I do have the concern that if we continue to 225 00:15:31,240 --> 00:15:37,560 Speaker 1: view this as a very transient feature, that response may 226 00:15:37,800 --> 00:15:41,200 Speaker 1: indeed mimic some of the errors we saw in the 227 00:15:41,280 --> 00:15:52,360 Speaker 1: nineteen seventies. Let me stop there, Thank you comment, doctor Isabel. 228 00:15:52,560 --> 00:15:55,920 Speaker 1: I think this will be the debate that we are 229 00:15:55,960 --> 00:15:59,840 Speaker 1: going to have going forward. I mean, in them over 230 00:16:00,120 --> 00:16:05,560 Speaker 1: is past decade where inflation was always below the target, 231 00:16:05,720 --> 00:16:10,120 Speaker 1: we we basically I mean we were facing shocks both 232 00:16:10,280 --> 00:16:13,480 Speaker 1: on the supply and on the remand side that we're 233 00:16:13,520 --> 00:16:17,080 Speaker 1: more deflationary. But it may actually be that we are 234 00:16:17,240 --> 00:16:20,800 Speaker 1: that this is now changing. And one reason why why 235 00:16:21,640 --> 00:16:26,680 Speaker 1: it is changing is actually the green transition. And I mean, 236 00:16:26,720 --> 00:16:30,000 Speaker 1: if you if you think about something like carbon prices, 237 00:16:30,640 --> 00:16:34,560 Speaker 1: you can of course think of it as like supply 238 00:16:34,760 --> 00:16:39,080 Speaker 1: side shocks. And we will have many of those going 239 00:16:39,160 --> 00:16:43,360 Speaker 1: forward again and again and again and again, and then 240 00:16:43,400 --> 00:16:46,720 Speaker 1: the question comes up, what are we going to do 241 00:16:46,800 --> 00:16:50,120 Speaker 1: about it? Can we say that we are just going 242 00:16:50,160 --> 00:16:53,920 Speaker 1: to look through all of that, even though of course 243 00:16:54,000 --> 00:16:58,480 Speaker 1: it does we use the purchasing power of people. And 244 00:16:58,680 --> 00:17:02,080 Speaker 1: this is a very difficult topic. I think we need 245 00:17:02,200 --> 00:17:06,439 Speaker 1: much more research on there. It's an open question, but 246 00:17:06,600 --> 00:17:10,520 Speaker 1: these are very difficult questions, and I think there's not 247 00:17:10,640 --> 00:17:14,320 Speaker 1: yet a good answer to that. Our economists have just 248 00:17:14,359 --> 00:17:18,240 Speaker 1: done some research into into this which talks about the 249 00:17:18,280 --> 00:17:21,159 Speaker 1: likelihood of more and more shocks to inflation, but also 250 00:17:21,240 --> 00:17:24,320 Speaker 1: the inflationary impact of just moving to a higher carbon price. 251 00:17:24,720 --> 00:17:27,040 Speaker 1: You know, there's a there's a straightforward impact of that, 252 00:17:27,080 --> 00:17:29,400 Speaker 1: and then there's, as you say, the potential for lots 253 00:17:29,400 --> 00:17:32,479 Speaker 1: of more a lot more variability of inflation and supply 254 00:17:32,560 --> 00:17:37,160 Speaker 1: side shocks on either on either side. Um militia. When 255 00:17:37,200 --> 00:17:41,480 Speaker 1: you were talking earlier and you were talking about the 256 00:17:41,520 --> 00:17:47,680 Speaker 1: importance of the central bank flagging up the potentially unequal 257 00:17:47,720 --> 00:17:51,080 Speaker 1: impact of its policies in this in various ways, I 258 00:17:51,080 --> 00:17:53,280 Speaker 1: guess I was wondering, Okay, but what do you do 259 00:17:53,359 --> 00:17:55,560 Speaker 1: if you haven't got a well behaved government, if you 260 00:17:55,600 --> 00:17:58,560 Speaker 1: haven't got a government that actually responds to any of 261 00:17:58,640 --> 00:18:02,919 Speaker 1: your um careful explanations of what they might want to 262 00:18:02,960 --> 00:18:06,359 Speaker 1: do to correct the impact of your policies, And if 263 00:18:06,400 --> 00:18:08,960 Speaker 1: you have a government that isn't putting in place and 264 00:18:09,040 --> 00:18:13,440 Speaker 1: a good environment for for investment and isn't discouraging people 265 00:18:13,480 --> 00:18:17,520 Speaker 1: from doing lots of precautionary savings by having good social 266 00:18:17,560 --> 00:18:20,240 Speaker 1: safety nets. So what a central banks supposed to just 267 00:18:20,320 --> 00:18:22,879 Speaker 1: wash their hands at that point? Well, I think it 268 00:18:22,920 --> 00:18:25,720 Speaker 1: goes in two steps. I mean, I think you know 269 00:18:25,760 --> 00:18:29,439 Speaker 1: the first step is you, uh, you share the analysis 270 00:18:29,520 --> 00:18:31,199 Speaker 1: with the government. And I think most of us have 271 00:18:31,280 --> 00:18:33,159 Speaker 1: been in central banks now that central banks tend to 272 00:18:33,160 --> 00:18:37,120 Speaker 1: be slightly better resource than ministries of finance and they 273 00:18:37,160 --> 00:18:42,840 Speaker 1: have don't tell anyone they have deeper analytical capacity than 274 00:18:42,960 --> 00:18:47,960 Speaker 1: ministries of finance UM. And I think those initial that 275 00:18:48,080 --> 00:18:51,119 Speaker 1: first step can be done behind closed doors and saying 276 00:18:52,000 --> 00:18:55,040 Speaker 1: here's what our analysis shows is happening to income distribution, 277 00:18:55,119 --> 00:18:59,679 Speaker 1: this is what our analysis shows is happening to food 278 00:18:59,680 --> 00:19:01,760 Speaker 1: price is and what that means for certain types of 279 00:19:01,800 --> 00:19:07,280 Speaker 1: household for certain parts of the country, um and and 280 00:19:07,480 --> 00:19:13,239 Speaker 1: giving elected political leaders at least the information so that 281 00:19:13,280 --> 00:19:16,320 Speaker 1: they can't say we didn't know that this was happening. 282 00:19:16,320 --> 00:19:19,080 Speaker 1: I think that's that one. I think it's that too, if, 283 00:19:19,160 --> 00:19:21,680 Speaker 1: as you say, Stephanie, there's a government that's actually unwilling 284 00:19:21,760 --> 00:19:25,200 Speaker 1: to act. I don't think that should change central banks 285 00:19:25,240 --> 00:19:27,679 Speaker 1: adherence to their mandates, and they should subviously say, ah ha, 286 00:19:27,800 --> 00:19:30,040 Speaker 1: we will be the white knight who will resolve the 287 00:19:30,080 --> 00:19:34,399 Speaker 1: income distributional or climate change consequences. But I do think, 288 00:19:35,240 --> 00:19:37,280 Speaker 1: you know, there have been many brave central bankers in 289 00:19:37,320 --> 00:19:41,040 Speaker 1: recent years who have gone public with some of this 290 00:19:41,240 --> 00:19:44,560 Speaker 1: kind of analysis, uh, and simply just by putting it 291 00:19:44,600 --> 00:19:47,320 Speaker 1: in the public domain but not necessarily acting on it, 292 00:19:47,359 --> 00:19:50,400 Speaker 1: I think can be quite powerful. Uh. And so that's 293 00:19:50,400 --> 00:19:53,080 Speaker 1: what I would argue should be done in cases where 294 00:19:53,080 --> 00:19:56,640 Speaker 1: governments are unwilling to deal with some of these wider consequences. 295 00:19:57,480 --> 00:20:00,040 Speaker 1: I actually had this this comment already when I I 296 00:20:00,920 --> 00:20:06,080 Speaker 1: heard um news very nice remarks. I actually think we 297 00:20:06,200 --> 00:20:08,240 Speaker 1: have to go as central banks, we have to go 298 00:20:08,320 --> 00:20:11,040 Speaker 1: a bit beyond what she said. So I think it's 299 00:20:11,080 --> 00:20:14,720 Speaker 1: it's not enough to simply tell governments so you see 300 00:20:14,760 --> 00:20:19,639 Speaker 1: here there's a distributional problem, please do something about it. Um. So. 301 00:20:19,680 --> 00:20:22,440 Speaker 1: I don't think that's enough, because of course we do 302 00:20:22,600 --> 00:20:26,639 Speaker 1: have some leeway what we do precisely, so we have 303 00:20:26,840 --> 00:20:29,520 Speaker 1: lee way which tools to use. And if we know 304 00:20:30,119 --> 00:20:37,400 Speaker 1: that that certain tools have UM stronger distributional consequences than others. 305 00:20:37,440 --> 00:20:41,440 Speaker 1: That may be an argument for using one tool and 306 00:20:41,520 --> 00:20:45,520 Speaker 1: not the other. Similarly, it may actually affect the calibration 307 00:20:45,840 --> 00:20:48,359 Speaker 1: of our tools. So for example, I mean in our 308 00:20:48,520 --> 00:20:53,040 Speaker 1: strategy we have this concept of the medium term um 309 00:20:53,320 --> 00:20:57,320 Speaker 1: which which gives us a bit of flexibility regarding the question. 310 00:20:57,720 --> 00:21:00,359 Speaker 1: At one other point I would like to to us 311 00:21:00,440 --> 00:21:03,879 Speaker 1: is that, of course one one cannot take the position 312 00:21:04,400 --> 00:21:08,680 Speaker 1: that central banks should not care at all about distributional 313 00:21:08,720 --> 00:21:13,200 Speaker 1: effect because I mean, these distributional effects out of course 314 00:21:13,280 --> 00:21:16,240 Speaker 1: there and the way we act does have these effects. 315 00:21:16,280 --> 00:21:18,080 Speaker 1: Or we are not. We are never neutral. We are 316 00:21:18,119 --> 00:21:22,920 Speaker 1: never neutral, and I think we cannot we cannot ignore that, 317 00:21:22,960 --> 00:21:25,400 Speaker 1: but we we have to, and we have to raise 318 00:21:25,440 --> 00:21:27,840 Speaker 1: awareness of that and have to be honest about that. 319 00:21:28,840 --> 00:21:31,440 Speaker 1: Ellen has had a great question, which I think because 320 00:21:31,440 --> 00:21:33,080 Speaker 1: we're not we're not going to end up with that 321 00:21:33,160 --> 00:21:35,200 Speaker 1: much time. But I'm interested in what any of you 322 00:21:35,240 --> 00:21:39,159 Speaker 1: think about it. So she was she suggests um that 323 00:21:40,040 --> 00:21:43,960 Speaker 1: central banks seem like it's a policy success. You know 324 00:21:44,040 --> 00:21:47,280 Speaker 1: that we've had these institutions that we made independent and 325 00:21:47,320 --> 00:21:49,640 Speaker 1: that made policy better, and they were able to look 326 00:21:49,680 --> 00:21:53,199 Speaker 1: through the political cycle and cooperate with one another to 327 00:21:53,320 --> 00:21:59,000 Speaker 1: achieve global objectives. Um. Should we be looking to reproduce 328 00:21:59,080 --> 00:22:03,760 Speaker 1: that model for other crucial public goods like not least 329 00:22:04,240 --> 00:22:09,440 Speaker 1: getting an effective carbon price? Um? And she suggests maybe 330 00:22:09,480 --> 00:22:13,800 Speaker 1: having independent carbon councils for setting carbon prices. But just wonder, 331 00:22:13,840 --> 00:22:16,000 Speaker 1: I mean, even if we don't think there could necessarily 332 00:22:16,000 --> 00:22:19,840 Speaker 1: be a global Carbon Council tomorrow unless unless COPED twenty 333 00:22:19,880 --> 00:22:24,119 Speaker 1: six does something very interesting. Um, But is that? Do 334 00:22:24,160 --> 00:22:26,879 Speaker 1: we think there's there's other areas of public policy that 335 00:22:26,920 --> 00:22:30,880 Speaker 1: we should be following the central bank model minusia maybe? 336 00:22:31,040 --> 00:22:35,520 Speaker 1: Or well, I mean it's interesting there are some domains 337 00:22:35,560 --> 00:22:39,040 Speaker 1: in which it's been possible to d politicized aspects of 338 00:22:39,080 --> 00:22:41,800 Speaker 1: decision making, and central banks are a really good example. 339 00:22:42,560 --> 00:22:47,080 Speaker 1: Many countries have independent fiscal councils now which independent of 340 00:22:47,119 --> 00:22:52,400 Speaker 1: the finance ministry, assess the budget and report on fiscal 341 00:22:52,520 --> 00:22:56,159 Speaker 1: policy in a neutral way. There's about forty or fifty 342 00:22:56,160 --> 00:22:59,200 Speaker 1: of them now spread around the world. In the US 343 00:22:59,280 --> 00:23:02,280 Speaker 1: they have the base Closure Permission, Yes, base Closure Commission, 344 00:23:02,320 --> 00:23:06,720 Speaker 1: that's right, that would take a neutral view. In some countries, uh, 345 00:23:07,480 --> 00:23:10,600 Speaker 1: the definition of voting districts is done by an independent 346 00:23:10,720 --> 00:23:14,159 Speaker 1: entity that does it on a scientific basis to de 347 00:23:14,280 --> 00:23:18,840 Speaker 1: politicize it. I mean, you know, as a lifelong technocrat, 348 00:23:19,040 --> 00:23:21,080 Speaker 1: I have a lot of sympathy with these kind of 349 00:23:21,080 --> 00:23:25,120 Speaker 1: approaches because it it makes decisions on a rational basis, 350 00:23:25,119 --> 00:23:27,520 Speaker 1: It does all the things that Ellen says in her 351 00:23:27,760 --> 00:23:34,080 Speaker 1: and her question, which is it's you know, rational, accountable, independent, etcetera. 352 00:23:35,480 --> 00:23:38,040 Speaker 1: So I would love I would love to see more 353 00:23:38,160 --> 00:23:41,360 Speaker 1: aspects of government policy being subjected to that kind of rare. 354 00:23:42,119 --> 00:23:45,680 Speaker 1: But the truth is we're in a moment of kind 355 00:23:45,680 --> 00:23:49,920 Speaker 1: of nationalism and populism and and increasing you know, wearing 356 00:23:49,960 --> 00:23:55,240 Speaker 1: a mosque has become political um and so it feels 357 00:23:55,280 --> 00:23:59,359 Speaker 1: like we're not at a at a moment when taking 358 00:23:59,400 --> 00:24:03,720 Speaker 1: things out of the political realm seems very likely. But 359 00:24:03,800 --> 00:24:05,800 Speaker 1: I do think we need to keep thinking about where 360 00:24:05,800 --> 00:24:08,680 Speaker 1: those opportunities are. And maybe you're right, maybe carbon is 361 00:24:08,720 --> 00:24:12,240 Speaker 1: the one is the next place where thinking about just 362 00:24:12,280 --> 00:24:15,000 Speaker 1: as an example, uh, you know, one of the biggest 363 00:24:15,000 --> 00:24:19,480 Speaker 1: issues with carbon markets is that, uh there is uh 364 00:24:19,760 --> 00:24:23,840 Speaker 1: there is complete inconsistency in the way that carbon credits 365 00:24:24,119 --> 00:24:29,199 Speaker 1: offsets emissions trading. It's the wild West. I mean I 366 00:24:29,240 --> 00:24:31,840 Speaker 1: know this personally because the LC just announced that we're 367 00:24:31,840 --> 00:24:36,040 Speaker 1: the first carbon neutral university in the UK. But when 368 00:24:36,040 --> 00:24:38,840 Speaker 1: we went to try and buy carbon credits it was 369 00:24:38,920 --> 00:24:41,800 Speaker 1: the wild West. I mean it was it was completely 370 00:24:41,920 --> 00:24:45,480 Speaker 1: unregulated and we had to work really hard. And that 371 00:24:45,640 --> 00:24:51,040 Speaker 1: might be an area where, for example, independent entities could 372 00:24:51,080 --> 00:24:54,320 Speaker 1: be created to do verification. At the moment, there's a 373 00:24:54,359 --> 00:24:57,119 Speaker 1: proliferation of lots of little NGOs that do this. But 374 00:24:57,200 --> 00:24:59,159 Speaker 1: if we're going to have a serious carbon market and 375 00:24:59,200 --> 00:25:02,240 Speaker 1: financial inst tuitions are going to have to verify this stuff, 376 00:25:03,080 --> 00:25:06,199 Speaker 1: maybe we need an independent entity that isn't the Central 377 00:25:06,200 --> 00:25:10,480 Speaker 1: Bank but looks like an independent institution that would enable 378 00:25:10,520 --> 00:25:14,520 Speaker 1: that market to function. And maybe there's enough political support 379 00:25:14,680 --> 00:25:17,520 Speaker 1: that we might actually get it in that domain, even 380 00:25:17,520 --> 00:25:20,320 Speaker 1: though we can't get it happens. So the environmental equivalent 381 00:25:20,320 --> 00:25:23,760 Speaker 1: of the of the generally accepted accounting principles, which many 382 00:25:23,800 --> 00:25:26,800 Speaker 1: people would say had made played a very big role 383 00:25:26,840 --> 00:25:31,840 Speaker 1: in exactly global capitalism globalization. Carmen or or Isabel, what 384 00:25:31,960 --> 00:25:36,680 Speaker 1: do you think about this suggestion? Well, let me say 385 00:25:36,720 --> 00:25:39,199 Speaker 1: that a concern that I have at the moment is 386 00:25:39,240 --> 00:25:43,080 Speaker 1: that the pendulum actually is swinging in the other direction. 387 00:25:43,840 --> 00:25:48,439 Speaker 1: Central bank independence was a really big movement. It really 388 00:25:48,520 --> 00:25:51,720 Speaker 1: took of course route first in the advanced economy and 389 00:25:51,760 --> 00:25:57,320 Speaker 1: then spread to the emerging markets and developing countries. So 390 00:25:57,760 --> 00:26:02,480 Speaker 1: my concern in response to her lens question, is that 391 00:26:04,400 --> 00:26:10,480 Speaker 1: in this more politicized environment, more much more by modal views, 392 00:26:10,720 --> 00:26:15,040 Speaker 1: if you will, bipolar by modal views, if you will, 393 00:26:16,160 --> 00:26:21,720 Speaker 1: the pendulum is actually unfortunately moving in the opposite, in 394 00:26:21,760 --> 00:26:32,600 Speaker 1: the artosite direction. I wanted to sort of I'll go 395 00:26:32,720 --> 00:26:35,760 Speaker 1: back to this question of distributional consequences, but it relates 396 00:26:35,760 --> 00:26:37,560 Speaker 1: to some of the things that we were saying about 397 00:26:37,560 --> 00:26:43,400 Speaker 1: the changing political climate. People are blaming central bank policy 398 00:26:43,680 --> 00:26:50,440 Speaker 1: for uh penalizing savers and increasing wealth inequality, and many 399 00:26:50,520 --> 00:26:55,800 Speaker 1: populous leaders are making central bank scapegoats for you in 400 00:26:55,840 --> 00:26:59,119 Speaker 1: their arguments against the current system. So I guess I 401 00:26:59,160 --> 00:27:02,119 Speaker 1: want if we stick with this line that you can't 402 00:27:02,200 --> 00:27:05,720 Speaker 1: really intervene on the distributional front. You can only kind 403 00:27:05,760 --> 00:27:09,359 Speaker 1: of urge and explain. Is there a risk that you'll 404 00:27:09,359 --> 00:27:12,560 Speaker 1: be sort of damned either way, you know, because you'll 405 00:27:12,600 --> 00:27:15,520 Speaker 1: be considered to have had all of these negative political 406 00:27:15,560 --> 00:27:21,119 Speaker 1: implications and your your independence is compromised by that, maybe 407 00:27:21,160 --> 00:27:25,520 Speaker 1: even taken away because you didn't act on the distributional 408 00:27:25,600 --> 00:27:29,600 Speaker 1: consequences it's about. So let me say first that of 409 00:27:29,640 --> 00:27:34,240 Speaker 1: course it's I mean it starts with communication. So communication 410 00:27:34,320 --> 00:27:40,720 Speaker 1: is extremely important. We often see that people don't understand 411 00:27:40,920 --> 00:27:43,840 Speaker 1: what we are doing. And this is not just people 412 00:27:43,880 --> 00:27:48,000 Speaker 1: who are not very well educated in economic terms, but 413 00:27:48,080 --> 00:27:53,040 Speaker 1: it's even leading politicians who don't understand what what we 414 00:27:53,080 --> 00:27:57,520 Speaker 1: are doing. And I mean they're the first thing, of course, 415 00:27:57,560 --> 00:28:00,760 Speaker 1: we have to do is to explain as much as 416 00:28:00,800 --> 00:28:03,840 Speaker 1: we can in a language that people understand. I mean, 417 00:28:03,920 --> 00:28:06,879 Speaker 1: this is um something we have to deliver. We cannot 418 00:28:06,880 --> 00:28:10,040 Speaker 1: ask them to first get an economics PhD. But we 419 00:28:10,080 --> 00:28:13,000 Speaker 1: have to explain it so that people understand it. Then 420 00:28:13,160 --> 00:28:15,880 Speaker 1: I think we have to be honest about the side 421 00:28:15,880 --> 00:28:19,320 Speaker 1: effects of our of our policies, and we have to 422 00:28:19,400 --> 00:28:24,200 Speaker 1: be able to explain why we believe that the benefits 423 00:28:24,320 --> 00:28:27,439 Speaker 1: are larger than the costs. If we cannot say that, 424 00:28:27,920 --> 00:28:32,280 Speaker 1: then probably we shouldn't follow those policies. So and and 425 00:28:32,320 --> 00:28:34,120 Speaker 1: then of course meets we have to do this analysis. 426 00:28:34,160 --> 00:28:36,359 Speaker 1: I mean, that's of course also something that we that 427 00:28:36,480 --> 00:28:41,320 Speaker 1: we have to do. UM. But the problem is that 428 00:28:41,360 --> 00:28:45,480 Speaker 1: there are times when all of this is even more complicated, 429 00:28:45,520 --> 00:28:47,480 Speaker 1: and I think we are in such a time now. 430 00:28:48,160 --> 00:28:51,840 Speaker 1: So for it's quite some time we have been arguing, Okay, 431 00:28:51,880 --> 00:28:56,200 Speaker 1: our instruments have all these side effects, but see inflation 432 00:28:56,320 --> 00:28:59,120 Speaker 1: is so low, we have to do it. But now 433 00:28:59,400 --> 00:29:02,440 Speaker 1: what people are seeing is so they're still doing all 434 00:29:02,440 --> 00:29:06,520 Speaker 1: those things. The side effects are getting maybe even bigger. 435 00:29:07,360 --> 00:29:10,880 Speaker 1: But inflation is it five percent or it's approaching five 436 00:29:11,880 --> 00:29:17,640 Speaker 1: so um and that becomes extremely difficult. And I still 437 00:29:17,640 --> 00:29:19,480 Speaker 1: don't know how to solve that problem. But I mean, 438 00:29:19,520 --> 00:29:22,760 Speaker 1: this is kind of the situation that we're facing now, 439 00:29:23,480 --> 00:29:28,720 Speaker 1: and that indeed um then also poses a threat to 440 00:29:28,840 --> 00:29:33,040 Speaker 1: our independence because we do see that many politicians now 441 00:29:33,080 --> 00:29:36,680 Speaker 1: speak up and say are they still following the mandate 442 00:29:36,760 --> 00:29:39,160 Speaker 1: or not? And we have to keep that in mind. 443 00:29:40,880 --> 00:29:45,360 Speaker 1: Niche risks to central banks. Do you think they're in 444 00:29:45,360 --> 00:29:48,640 Speaker 1: this perilous position that actually in different ways Carmen and 445 00:29:48,760 --> 00:29:53,400 Speaker 1: Isabel have described slightly different ways. I think the dangers 446 00:29:53,440 --> 00:29:57,600 Speaker 1: are greatest in some of the emerging markets that Carmon 447 00:29:57,680 --> 00:30:02,560 Speaker 1: identify in terms of risk to central bank depends. In 448 00:30:02,600 --> 00:30:06,080 Speaker 1: the wake of COVID, many emerging market central banks did 449 00:30:06,240 --> 00:30:10,520 Speaker 1: things like QUEI that they had never done before and 450 00:30:11,000 --> 00:30:14,560 Speaker 1: adopted policies that were being used from the advanced economies, 451 00:30:15,280 --> 00:30:19,080 Speaker 1: and in some of those cases, the arguments that this 452 00:30:19,240 --> 00:30:22,600 Speaker 1: was fiscal dominance I think is kind of compelling. Actually 453 00:30:23,040 --> 00:30:25,520 Speaker 1: it did look an awful lot like fiscal dominance in 454 00:30:25,600 --> 00:30:29,360 Speaker 1: some countries, and that's worried and that's sort of a 455 00:30:29,400 --> 00:30:33,560 Speaker 1: step in the direction of eroding independence. Um. You know, 456 00:30:33,640 --> 00:30:36,640 Speaker 1: I think in the advanced economies, I mean, I agree 457 00:30:36,640 --> 00:30:42,560 Speaker 1: with Isabelle, it depends how persistent this supply driven inflation is. 458 00:30:42,880 --> 00:30:47,440 Speaker 1: If it passes uh, then I and it is transitory, 459 00:30:47,440 --> 00:30:51,960 Speaker 1: as most advanced economy central banks seem to think, then 460 00:30:52,080 --> 00:30:57,400 Speaker 1: I think the independence is not so threatened. Um. But 461 00:30:57,520 --> 00:31:01,000 Speaker 1: if it, if it is more persistent, then I think 462 00:31:01,080 --> 00:31:05,360 Speaker 1: the kind of trilemma that she described of you're doing 463 00:31:06,400 --> 00:31:09,920 Speaker 1: these rather you know, these very loose monthly policies, You're 464 00:31:09,960 --> 00:31:13,480 Speaker 1: having all these spillover effects and you're you're still not 465 00:31:13,600 --> 00:31:17,400 Speaker 1: delivering your inflation target. It becomes a bit of a problem. 466 00:31:17,440 --> 00:31:19,560 Speaker 1: And I think center brates were able to hold onto 467 00:31:19,600 --> 00:31:24,040 Speaker 1: their independence because they were so successful for so many 468 00:31:24,080 --> 00:31:27,760 Speaker 1: decades at delivering the inflation target. I mean, it has 469 00:31:27,760 --> 00:31:30,640 Speaker 1: been one of the main the biggest policy successes that 470 00:31:30,680 --> 00:31:34,160 Speaker 1: we have seen in the last thirty years. Um. And 471 00:31:34,280 --> 00:31:38,960 Speaker 1: so I do think that's the key to to this dilemma. 472 00:31:39,480 --> 00:31:41,720 Speaker 1: It's sobering we've ended this way, But I guess I 473 00:31:41,760 --> 00:31:44,320 Speaker 1: should also recall that we started off thinking about whether 474 00:31:44,320 --> 00:31:47,800 Speaker 1: the job should be bigger than originally intended, and we've 475 00:31:47,880 --> 00:31:50,600 Speaker 1: ended up worrying most about whether Central Works can continue 476 00:31:50,640 --> 00:31:53,480 Speaker 1: to do their core job. And I guess we should 477 00:31:53,480 --> 00:31:55,400 Speaker 1: also recall that this has not been a problem that 478 00:31:55,440 --> 00:31:57,320 Speaker 1: we have talked about very much in these kind of 479 00:31:57,320 --> 00:32:00,600 Speaker 1: conversations for quite a long time, and maybe that's sign 480 00:32:00,640 --> 00:32:04,080 Speaker 1: of some kind of program. Um. It's been fantastic, and 481 00:32:04,280 --> 00:32:07,200 Speaker 1: we could carry on for many more hours. Um. But 482 00:32:07,320 --> 00:32:11,400 Speaker 1: thank you so much to Ellen for helping to bring together, 483 00:32:11,480 --> 00:32:14,520 Speaker 1: Ellen Ray for bringing together people in this this conference 484 00:32:14,680 --> 00:32:18,880 Speaker 1: all day, and especially to Isabel Schabel and Carmen Reinhart 485 00:32:18,920 --> 00:32:30,040 Speaker 1: kind of Minish Baroness Shafiq for this great conversation. That's 486 00:32:30,080 --> 00:32:34,520 Speaker 1: it for this special women omics edition of Stephanomics. We'll 487 00:32:34,560 --> 00:32:37,280 Speaker 1: be back to normal next week with the curious Case 488 00:32:37,320 --> 00:32:41,000 Speaker 1: of the Missing US worker, among other things. Join us then, 489 00:32:41,400 --> 00:32:43,880 Speaker 1: and in the meantime, if you like the program, please 490 00:32:43,920 --> 00:32:47,480 Speaker 1: do rate it and follow at Economics on Twitter for 491 00:32:47,560 --> 00:32:51,640 Speaker 1: more news and analysis. From Bloomberg Economics. This episode was 492 00:32:51,680 --> 00:32:54,920 Speaker 1: produced by Mangnus Henryson. With special thanks to the Center 493 00:32:54,920 --> 00:32:59,160 Speaker 1: for Economic Policy Research and especially Professor Ellen Ray for 494 00:32:59,240 --> 00:33:02,600 Speaker 1: inviting me to a joint conference with the European Central Bank. 495 00:33:03,120 --> 00:33:07,920 Speaker 1: Also to Baroness Minus Shafiq, Dr Carmen Reinhardt and Dr 496 00:33:08,040 --> 00:33:13,120 Speaker 1: Isabel Schnabel. Mike Sasso is executive producer of Stephanomics and 497 00:33:13,200 --> 00:33:16,040 Speaker 1: the head of Bloomberg Podcast is Francesco Legi.