We have made some progress in each of these areas; yet some concerns persist regarding the pace and quality of our progress. Macroeconomic and financial conditions around us are also changing swiftly, posing new challenges and lending urgency to accelerating our efforts towards our vision.
Cukierman and Gerlach show formally how inflation bias in monetary policy can arise due to the combination of asymmetric concerns about positive and negative output gaps, and uncertainty about the future state of the economy. 11 This observation could explain why the loosening phases of monetary policy reductions are generally quicker than the tightening ones.