What is monetary policy normalisation?
The surge in inflation has prompted central banks to normalise their monetary policy. This means they are tightening financing conditions by raising key interest rates.
Latest articles and blogs
-
Inflation expectations help in analysing the euro area inflation outlook
Inflation expectations play a key role in inflation projections. Different measures of inflation expectations point towards inflation remaining below the ECB's 2% target in the coming years.
Corona crisis has increased the risk of stagnation in the euro area
Is the euro area drifting into a liquidity trap (a combination of low interest rates and low inflation) as a consequence of the corona crisis? There is a heightened risk of this, but the policy measures taken are preventing negative trends.
The trade war has significantly weakened the global economy
According to the Bank of Finland’s model simulations, the tariff rises already introduced will serve to slow global growth by 0.7 of a percentage point.
Alternative scenarios linked to the global impact of US fiscal and trade policies
The Bank of Finland has calculated alternative scenarios on the effects of risks to the global economy. In these scenarios, global growth weakens more abruptly than currently forecast.
Post-crisis monetary policy modelling
In the aftermath of the global financial crisis many central banks cut their policy rates close to zero and introduced non-standard monetary policy measures. The new situation has also presented a challenge for monetary policy modelling.
Reports of the Phillips curve's death are greatly exaggerated
Euro area inflation has been slow in recent years. The way slow inflation was explained before the crisis has been challenged.
The natural rate of interest – a useful but uncertain indicator for the economy
During the last 10 years, the natural rate of interest in the advanced economies is estimated to have declined substantially. However, estimates of the level of the natural rate of interest are uncertain, which hampers the use of this interest rate as a monetary policy guide.
Why is Finland trailing its peers?
Before the current recession, Finland was closing the gap on Europe’s wealthiest small economies but is now falling ever further behind.