But if we want to rebuild our supply capacity and strengthen domestic sources of growth, other policy areas need to refocus. Most importantly, they need to direct investment towards the transitions that will define our future – and the financial sector needs to be able to actively support these transitions. Consistency between public policy areas remains important in a post-pandemic world.
Nevertheless, the fiscal and economic policy reforms needed to bring about a lasting solution are, in the short run, costly – both politically and economically. Therefore, a major challenge for monetary policy is that its unconventional measures and the temporary relief they afford are not seen as an excuse to delay, or even reverse, these reforms.