Monetary policy trade-offs in a heterogenous currency area

Motivation
Monetary policy in a heterogeneous currency area faces inherent trade-offs because differences across countries, regions, sectors and groups shape both how shocks are transmitted and how effectively policy works. A single monetary policy action – such as adjusting interest rates – affects agents differently, stabilising prices and output for some, while potentially increasing risks to output, employment or financial stability for others. These variations generate multiple trade-offs: When pursuing disinflation, policymakers may need to balance the goal of lowering inflation with potential costs across sectors and regions. Conversely, a single expansionary monetary policy aimed at avoiding below-target inflation at the aggregate level may perpetuate inflation or create financial imbalances in some sectors, regions or countries. The tools available to central banks – policy rates, balance sheet operations and communication – are limited and cannot address all these trade-offs on their own. Complementary fiscal and macroprudential policies are essential in supporting the overall economy and managing sectoral or regional disparities. A clear understanding of heterogeneity within the monetary union is crucial for calibrating macroeconomic policies that support economies operating near potential, sustain inflation close to target and mitigate the risk of creating or worsening financial or economic vulnerabilities. This conference seeks to deepen our understanding of how heterogeneity shapes monetary policy trade-offs and how fiscal and macroprudential policies can complement efforts to achieve better outcomes. Bringing together policymakers, academics and financial industry experts, it aims to foster an exchange of ideas at the intersection of policy practice and academic research. The programme combines policy-oriented discussions designed to stimulate dialogue and analytical exchange with academic sessions dedicated to presenting and critically assessing new research.

Call for Papers (pdf): OeNB-SUERF Conference 2026

Scientific coordination: Ernest Gnan (SUERF), María Teresa Valderrama (OeNB)