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Australian Conference of Economists 2024에서 Lisa D. Cook 주지사님이 전반적인 글로벌 경제에 관해 연설한 내용입니다.

July 10, 2024

Common Inflation and Monetary Policy Challenges across Countries

Governor Lisa D. Cook

	English	Korean
1	emerging market economy (EME)	신흥경제국
2	Bank of England (BOE)	잉글랜드 은행
3	European Central Bank (ECB)	유럽 중앙 은행
4	Swedish Riksbank	스웨덴 국립은행 (리스크방크)
5	Reserve Bank of Australia	호주연방준비은행

Common Monetary Policy Response to the Pandemic

In the spring of 2020, economies around the world shut down or sharply limited business activity, especially for in-person services, including dining out and traveling. Governments introduced extraordinary fiscal support aimed at alleviating the socioeconomic effects of the pandemic. And, to prevent sharp financial and economic deterioration, most central banks responded aggressively by lowering policy rates, ramping up asset purchases, and taking other actions to support the flow of credit to households and businesses. Those efforts were sustained throughout 2020 and much of 2021, as the initial turmoil in financial markets subsided but the health situation remained uncertain.

Advanced economy central banks that had positive policy rates before the pandemic, including the Fed and the central banks of Australia, Canada, and the United Kingdom, cut these rates to near zero. Central banks that entered the pandemic with policy rates already at zero, such as Sweden, or negative—including the euro area, Japan, and Switzerland—left their rates unchanged. Meanwhile, almost all emerging market economy (EME) central banks cut their policy rates. Although central banks acted quickly to reduce rates, policymakers cited a few reasons to refrain from deeper cuts: Among EME policymakers, concerns were expressed that further lowering rates risked exacerbating capital outflows, while some advanced economy central banks commented that further rate cuts, particularly in negative territory, could harm banks' financial health or would provide little additional monetary stimulus.

Many central banks also conducted significant asset purchases. These purchases were initially aimed at restoring market functioning and providing liquidity, but they also were seen as lowering long-term yields and easing broader financial conditions. The Fed and the Bank of England (BOE) restarted their purchases, while the European Central Bank (ECB) and the Swedish Riksbank increased the pace of their existing programs. And here, the Reserve Bank of Australia began asset purchases and introduced a target for the three-year government bond yield at the same level as its overnight rate.

The Rise of Inflation and the Common Monetary Policy Response

Over the course of 2021, as financial conditions improved, a strong recovery in consumer demand outpaced still constrained supply capacity in many countries, leading to production and transportation bottlenecks, which ultimately resulted in inflation. The surge in inflation was initially mostly concentrated in finished goods and commodities but later spread to services.2 As the economy started reopening with the lifting of lockdowns and rollout of vaccines, demand for services picked up. Similar to what played out with goods, the pickup in demand for services ran into a constrained supply of service workers. As services are more labor intensive than goods, and labor supply was still reeling from the consequences of the pandemic, the rebalancing of consumption from goods to services led to higher rates of inflation and nominal wage growth.

In response to rising inflation, central banks around the world started to remove some of the support that they provided during the height of the pandemic. As a first step, central banks let many of the emergency support programs—in which they had bought assets other than national government bonds—expire.