Warns against relying on stable macroeconomic relationshipsInflation risks have shifted from downside to upside since pandemicNatural interest rate (r*) uncertainty has increased significantlyPhillips curve relationship becoming more state-dependentOur recent experience has also taught us that central bankers should be
careful not to tie their hands too much by providing explicit forward
guidance.
It looks like central banks are learning that QE is for markets, not the economy:
Asset purchases have proven to be a powerful tool for market
stabilisation, while their cost-benefit ratio is less favourable when it
comes to stimulating the economy near the effective lower bound. QE
should therefore be used more cautiously in the future.
This article was written by Adam Button at www.forexlive.com.
