In particular, if the relationship between inflation and slack is relatively weak – implying a flat slope of the Phillips curve – a given degree of monetary accommodation is less likely to trigger the upward momentum in prices necessary to compensate for falling inflation expectations. As a consequence, actual inflation may decline, even in situations where monetary policy has been successful in reducing slack.
This statement also applies without qualification to the systems operated by the central banks (TARGET and EAF). That is because, just as the commercial banks operate their systems, such as EBA Clearing or SNP, without gainful intent, the central banks work theirs according to the principle of full cost recovering. The costs structure is regularly examined by independent auditors, for example.