IIF Chairman Axel Weber on Monetary Policy

The video discusses the challenges faced by central banks in managing inflation, particularly their late response in raising interest rates. It debates the credibility of maintaining a 2% inflation target and explores economic theories like the Phillips Curve. The long-term impact of debt and monetary policy on inflation is analyzed, along with the role of central banks' balance sheets in fiscal expansion. The discussion also covers interest rates and economic recovery post-pandemic, and concludes with reflections on teaching economics during financial crises.

What is the main challenge faced by central banks according to the first section?

• Increasing government spending

• Reducing unemployment rates

• Raising interest rates too early

• Maintaining a 2% inflation target

Which theoretical construct is mentioned in relation to inflation and employment?

• Laffer Curve

• Phillips Curve

• Kuznets Curve

• Lorenz Curve

What has been the impact of central banks' balance sheets over the last decade?

• Decreased global GDP

• Reduced government debt

• Accommodated fiscal expansion

• Increased market liquidity

What is the suggested action for central banks regarding their balance sheets?

• Ignore balance sheet size

• Reduce their balance sheets

• Maintain current levels

• Increase their balance sheets

What is the current strategy of central banks as discussed in the final section?

• Raising interest rates and reducing balance sheets

• Lowering interest rates

• Increasing government spending

• Focusing solely on employment

How is the ECB's position described compared to the Fed?

• Less affected by geopolitical factors

• Equally positioned

• Weaker and more constrained

• Stronger and more stable

What external factor is affecting the ECB's economic situation?

• Dependence on China

• Trade agreements with the US

• Oil prices

• Tourism decline