Challenges and Lessons from Central Banks in the Pandemic

Abstract

In the context of the COVID-19 pandemic, three shocks of different magnitude and duration are identified: financial, supply and demand; and their initial effects and the policies applied in various countries are described. Given the inflationary pressures registered during 2021, the differences in monetary policy responses between advanced and emerging economies are highlighted. In the case of Mexico, the measures implemented by the Central Bank and the challenges that arose are mentioned. Regarding the lessons derived from the pandemic for central banks of emerging economies, the relevance of a timely response to the financial shock and having a solid macroeconomic framework, well-anchored inflation expectations and central banks with high credibility are highlighted. Finally, the importance of conducting monetary policy with degrees of freedom and flexibility to adjust to an uncertain environment is also highlighted.

JEL classification: E50 ;  E52 ; E58