It is essential to look further ahead: the long-term sustainability of the public finances is fundamental to ensure the effectiveness of policies in the short term as well. Monetary policies The central banks have made a prompt and coordinated response to the crisis. Official interest rates have been lowered rapidly; in many countries they are near zero.
Worrying about getting too close to the lower limit for nominal interest rates cannot be a reason for inaction. The experience of the United States in the 1930s and of Japan in the 1990s suggests that in the initial stages of the crisis it is necessary to counter the tendency of real interest rates to increase.