Conversely, and this is may be more obvious, some non-standard monetary policy measures are likely to be withdrawn before raising interest rates. So, where do we stand now? Even though they are not yet back up to their pre-crisis levels, most financial market indicators have improved considerably.
However, a strategy should not just produce good results in economic models – it needs to work in practice as well. Average inflation targeting is a big ask – not just for financial market agents but for households and firms, too. They need to grasp this concept and update their inflation expectations if wages and prices are intended to respond accordingly.