For example, if the ongoing surge in protectionism becomes entrenched, the trend towards increasing globalization that we have observed since the mid-1980s might actually be reversed. Hence, inflation might at some point start trending upwards again. For the moment, however, the declining trend inflation component is something we will have to deal with. So what does this environment imply for central banks?
I’m calling this component “d”, because it is associated with credit default risk. But I’ll leave the “d” factor aside for now and I will come back to it at the end. Measures of performance How well has the ECB managed the transmission mechanism and the macroeconomy? Since the inception of the single currency the ECB has fulfilled its price stability mandate.