By some estimates it may be almost a year before the brunt of the effect of an interest rate change is felt on aggregate demand, although the influence appears sooner in some sectors of the economy than in others. And it may generally take longer still for a policy change to alter the course of inflation.
This environment should not be viewed merely as a consequence of the central banks’ reaction to the global financial crisis; in a longer time perspective, it is also the end point of a trend.