Our webinar on the "Monetary Toolkit" theme of the Bank of England Agenda for Research is underway! Chair Silvana Tenreyro introduces the four external researchers who are speaking: @ben_moll , Cynthia Wu ( @nd_econ), @mcmahonecon + Claudio Borio ( @bis_org)

Claudio Borio gets us underway. Asks if there are diminishing returns to monetary policy's ability to provide stimulus. Argues that many studies simply assume constant marginal returns + reversion to equilibrium.

Claudio raises questions about the natural rate. Argues models of natural rates don't give adequate role to financial system. Also, adding in policy inertia means "low rates beget low rates". And empirically, he argues using financial indicators gives a different estimate of R*.

He also argues that many empirical works start in early 1980s- at the start of the Volcker disinflation. Work which goes back earlier doesn't find the same decline in trend rates.

Claudio suggests key area for new research is how monetary policy affects inflation when rates are at very low levels. Suggests inflation may be relatively range bound + less influenced by expectations / policy at low levels.