Thus, a lessening of any of these factors, such as a sustained increase in the pace of productivity growth, would likely push up the natural rate of interest as well as GDP growth. What are the consequences of a higher natural rate of interest?
The Governing Council reiterated the need for a highly accommodative stance of monetary policy for a prolonged period of time to support underlying inflation pressures and headline inflation developments over the medium term. In particular, the Governing Council’s forward guidance will ensure that financial conditions adjust in accordance with changes to the inflation outlook.