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Panetta: The price of uncertainty and uncertainty about prices: monetary policy in the post-COVID-19 economy
The coronavirus (COVID-19) shock creates a uniquely high degree of uncertainty about the economic outlook[1]. We lack clarity about when the virus will be tamed and when social distancing measures can be relaxed; about the effects of the lockdown on confidence and growth; and about how the structure of the economy itself will evolve in response to the shock. Policymakers need nonetheless to form a view on the balance of risks in the economy. This is essential to communicate their reaction function, to decide how to act today and to influence expectations about tomorrow. Demonstrating to the public that macroeconomic ... (full story)