Equally important, the operating environment of monetary policy proper has been substantially transformed. In a way, monetary policy has to live in two different timelines. In the immediate and short-term, it has to deal with the economic slowdown. In the medium-to-long term, it has to deal with many analytical puzzles to stay effective. First, the short-term.
After two years of robust expansion, global growth is waning. As a result, (almost) all major central banks have had to put monetary policy normalisation on hold and instead to maintain an accommodative policy stance. This holds true for the ECB as well. On Wednesday, the ECB Governing Council concluded that an ample degree of monetary accommodation remains necessary to support the economic expansion.