In this speech, Megan Greene argues that the conventional wisdom that central banks should look through supply shocks needs to be reconsidered. She examines the UK’s recent experience with a pandemic and war in Ukraine to highlight lessons for central banks on how to think about supply shocks and adjust policy in response to them. She suggests that we are entering an age in which supply shocks are likely to be more frequent and severe, driven by factors like climate change and geopolitical tensions.
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