The major player in my view, in addition to the decline in NAIRU, is the coincidence of favorable supply shocks. The relative weights here are very important because they affect the challenge for monetary policy. Challenges for Monetary Policy The challenge for monetary policy, as always, is to sustain the best possible economic performance.
The emphasis here is on the “possible.” Sometimes we are expected to deliver more than what is possible. We aim for maximum sustainable growth and maximum sustainable levels of output and employment.