{
  "id": 18278875,
  "title": "Isabel Schnabel: Navigating stormy waters: reflections on monetary policy",
  "url": "https://urgent.news/2026/11/05/isabel-schnabel-navigating-stormy-waters-reflections-on-monetary",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-11-05T08:00:00.000Z",
  "source": {
    "name": "ECB Press",
    "slug": "ecb-press",
    "url": "https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp261105_1~5e97d9d5a0.en.html"
  },
  "original_language": "en",
  "account": "The past seven years have been an extraordinary journey, with central banks facing a rapidly changing global landscape. From a world of persistently low inflation to one marked by recurrent inflationary shocks, the Monetary Policy Committee has navigated through unprecedented challenges. As I reach the end of my tenure at the European Central Bank, I reflect on the lessons learned and the implications for the future of monetary policy.\n\nThe first takeaway is the importance of prioritizing instruments that enable quick adjustments in response to changing conditions. Prior to the pandemic, we had entered a period of chronically overpredicted inflation, focusing predominantly on bringing inflation back to target. However, the experience during and after the pandemic exposed a more persistent rise in inflation, challenging our analytical frameworks. This shift revealed two key features: the steepening of the Phillips curve, driven by more frequent price changes as firms protected profit margins, and the role of firms' profits in inflation, which played a more significant role than previously thought.\n\nThe pandemic acted as a structural break in many of the trends we had observed before. Rising investment needs related to green and digital transitions, coupled with changing geopolitical dynamics, transformed the savings glut of the past into a bond glut. This shift not only put upward pressure on inflation but also on the natural rate of interest. The unpredictability of these shocks and their consequences emphasizes the need for central banks to avoid becoming too attached to a specific view of the world or a particular class of models.\n\nThis lesson has significant implications for the design and conduct of monetary policy. We must be wary of commitments heavily reliant on a particular economic environment or class of models, leaving little flexibility to adapt when conditions change. As Charles Goodhart noted, \"The world changes, and if the world changes, you need sufficient flexibility to change the way that you operate within that.\"",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}