Explaining the common monetary policy stance in a national context is in practice a very challenging task, especially when countries are hit by asymmetric shocks. Reflecting the increasing complexity of monetary policy The challenge for communication to preserve consistency, acceptance and trust across geographies is accompanied by another, no less intricate, challenge: ensuring consistency over time.
Central banks’ monetary policy instruments have undergone a sea change over the last decade. The policy-controlled short-term interest rates of the ECB, the US Federal Reserve, the Bank of England and the Bank of Japan dropped from levels between 4% and 5% to essentially zero (see Figure 3) in a relatively short space of time.