Michael Saunders: Bank hosted speech “Supply and demand during and after the pandemic”

As well as reducing economic activity sharply over the last year, the pandemic has also had large effects on the economy’s potential output. 1 In this speech, I want to discuss some issues in measuring potential output and the amount of spare capacity in the economy at present, and some risks around the outlook for supply and demand.2 I will then turn to some considerations for monetary policy. I will make several main points. • The pandemic and associated restrictions have significantly reduced potential output over recent quarters, but the majority of these effects are likely to be fairly temporary. • I put … (full story)

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