In this paper I ask whether and how monetary policy will change as a consequence of the financial crisis. I reflect on some questions that are being raised regarding the design of monetary policy. I discuss whether central banks should raise their inflation objectives; whether they should “lean against the wind”; how best to incorporate the financial sector in the setting of monetary policy; and the desirability of introducing a macro-prudential framework to constrain financial sector. I then turn to the implications of the large projected increases in public debt for monetary policy.
White Paper No. 10, 2010