Monetary policy in times of high public debt

Stéphane Dupraz and Anna Rogantini Picco

Research Bulletin, 2026, vol. 148

Abstract: High public debt around the globe has revived concerns that it could impede central banks’ ability to control inflation. This article explains how public debt affects the work of central banks. They can still control inflation, but they must take public debt into account when setting rates, because debt affects the level of interest rates consistent with price stability. JEL Classification: E31, E62

Keywords: Monetary-Fiscal Interactions; Non-Ricardian Households; Price Stability (search for similar items in EconPapers)
Date: 2026-11
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