“The economy is facing profound structural changes”

On 20 November, Professor Dr Jens Weidmann, Professor of Practice in Central Banking, gave an exclusive lecture for Frankfurt School students and alumni. He spoke about how crises and simultaneous transformations such as the shift towards a more sustainable economy, demographic changes, increasing digitalisation and the potential growth of onshoring affect central banks and monetary policy.

One focus of Professor Weidmann's presentation was the topic of uncertainty, which has become a permanent condition and thus has an impact on important macroeconomic factors, in particular the behaviour of inflation. “Looking beyond the immediate concerns, the inflation environment could remain clouded in uncertainty, and it could shift in a more persistent way. The economy is facing profound structural changes that will also have an impact on inflation, as these changes matter for wage and price-setting dynamics”, said Jens Weidmann. “And, given this pervasive uncertainty, central banks would be well served to show humility with respect to the complex working of the economy, their capabilities to forecast it and what monetary policy can achieve. Acknowledging one’s own limitations and focusing on the core mandate will also help to anchor inflation expectations.”

After the lecture students and alumni had the opportunity to ask questions in a Q&A session moderated by Professor Dr Emanuel Mönch, Professor of Financial and Monetary Economics. The many questions led to a lively discussion, which was rounded off at the subsequent get together. Over food and drinks, the participants were able to continue their discussions, talk to the professors and expand their network.