Conclusion To conclude, one lesson should be clear: policy matters. Aggressive policies arrested the economic free fall triggered by the financial crisis. Policy action is driving the initial recovery. Policy-makers will have to act deftly to maintain stimulus long enough for private demand to take up the burden of growth, but not too long to undermine confidence in and the sustainability of that growth.
Furthermore, there is evidence that inflation expectations have become entrenched at levels consistent with the target. These developments have allowed for nominal interest rates to fall to levels last seen in the late 1970s.