Growth picking up but inflation remains subdued

How would a rapid but controlled restructuring of China’s economy or a sudden halt to debt-driven growth affect the Chinese and euro area economies?

A number of variations can be formed of the Taylor rule, all of which are simplifications. Monetary policy decisions cannot, however, be taken solely on the basis of simple rules.

By promising low interest rates in the future, a central bank can provide stimulus for the economy today. The effectiveness of this kind of forward guidance can be assessed by the impact it has on market expectations regarding interest rates.

The US economy has recovered from the financial crisis. Beginning in October, the Fed will reduce the holdings of securities on its balance sheet that it had purchased in its securities purchase programmes.

Several reforms improving banking and financial market regulation as well as supervision have been put through since summer 2013.

Shadow banking is a broad concept. A possible definition is that it comprises non-bank institutions which undertake bank-like activities. Another characteristic is that the sector is overall less regulated.