Monetary accommodation has opened up space for other economic policies in the euro area, which needs to be put to good use by pursuing economic reforms. Productivity and employment growth ultimately rest on our ability to reform.

There was a shift in the global economic cycle towards slower growth during the first half of 2018. The trade war and Brexit increase the risk of recession.

Global growth has slowed substantially during the course of the current year. One cause of this has been the trade war between the United States and China. Brexit, too, has added to the uncertainty surrounding the future course of the economy.

Slower-than-target inflation and a persistent decline in inflation expectations are key challenges for monetary policy. A negative equilibrium of prolonged low inflation and zero interest rates would fundamentally weaken monetary policy’s room for manoeuvre in balancing fluctuations in the economic cycle.

Finland’s economic growth will be slower during the next three years. Growth has also slowed in the euro area and elsewhere around the world. However, there are still possibilities for growth in the Finnish economy.

Short-lived volatility in consumer prices make it harder to monitor price pressures within the economy. Measures of core inflation describe price developments that are not driven by temporary factors.

The economic outlook for the euro area has deteriorated rapidly. The impact of Brexit on Europe as a whole is hard to predict. Another factor overshadowing the global economy is the trade dispute between the USA and China.

A review of the ECB’s monetary policy strategy is due in light of the latest economic research and the changed operating environment.