In contrast, the muted initial response in the ECB-BASE model and the BMEs can in part be related to the strong backwardlooking expectations formation process in these models. [14] These estimates imply that the models generate not only different scales of monetary policy impacts but also heterogeneous lags in the timing of the transmission of monetary policy to the economy and inflation.
This assumption is based, firstly, on a projection of some further slow-down in the rate of expansion of the total domestic economic activity. Last year, the rate of growth in gross domestic production declined to 3.1 per cent, down slightly from the 3.4 per cent of 1995.