These policies were supplemented by strengthening of institutions, encouraging good market practices, rationalised tax structures and enabling legislative and accounting framework. II. A review of monetary policy challenges  The conduct of monetary policy has become more challenging in recent years for a variety of reasons.
It reflects key underlying economic and financial developments. First, the underlying equilibrium real interest rate, or r* for short, has declined. This is the real rate of interest that balances savings and investments so that inflation remains stable. This chart shows estimates of r* for Denmark, the United States as well as a group of advanced economies.