According to Mervyn King, Governor of the Bank of England, monetary policy is considered efficient when it is boring. Today, monetary policy can by no means be called boring. On the contrary, it is quite interesting, fascinating and, above all, difficult. The happy days, as it were, are over.
While the past decade was a period of prosperity and price stability, thanks to globalisation and financial integration, growth and inflation currently seem to pose serious risks, while the menace of stagflation seems to threaten numerous large economies. Furthermore, the credit market crisis has put the global financial system at risk.