Between 2007 and 2010 the distribution of income widened in OECD countries and poorer households have been hit harder, especially in several euro area countries.1 Taken together, these developments are a source of great concern to all Europeans. To be clear, the central bank’s mandate is not to address rising inequalities or to steer the distribution of income.
In fact, the use of explicit redistributive monetary policy tools, such as credit controls, was abandoned decades ago. Since then, central banks have been granted goal independence and assigned a clear mandate to keep inflation low.