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Safeguarding macro & financial stability in a fragile environment: Transmission channels and policy challenges

The event will explore the challenges to macro and financial stability for the euro area emerging in the current environment, both from an academic and policy perspective. Monetary and fiscal policy had to adjust to the pandemic crisis and the subsequent terms-of-trade and supply side shock. The new monetary policy cycle is now feeding through the economy and affecting the financial system. Fiscal policy was well aligned with monetary policy during the pandemic shock, but less so more recently adding another layer of complexity. At the same time, European economies are affected by longer-term trends, such as ageing and climate change, impacting on both policy areas and shaping macro-economic and financial stability prospects in the long-term.