The Basic Thinking on Monetary Policy  The Two Challenges since the Bursting of the Bubble Economy (2) The Entrenched Mindset and Behavior Based on the Assumption That Wages and Prices Will Not Rise  (1) Lower Bound on Interest Rates Overnight Rate 9  Inflation Expectations  %  4  y/y % chg.  y/y % chg. Inflation expectations (left scale) CPI inflation (left scale) Wage growth (right scale)  8 3  7 6  8 6  2  4  1  2  0  0  -1  -2  -2 FY 90 91 92 93 94 95 96 97 98 99 00 01  -4  5 4 3 2 1 0 -1 FY 90 91 92 93 94 95 96 97 98 99 00 01  Notes: 1.
Jürgen Stark: Future trends in central banking  Dinner Speech by Dr Jürgen Stark, Deputy Governor of the Deutsche Bundesbank, at the Conference “The next 25 years in African Economic Development”, Bank of Botswana, on 6 July 2000.