As I have already explained, beyond safeguarding price stability, there is nothing monetary policy can do to promote growth and employment. Monetary policy measures will, in the long run, only influence the level of prices, whilst leaving the levels of growth and employment unchanged – a basic insight of monetary economics referred to as the “long-run neutrality of money”.
Historical experiences, in particular the experience of the 1970s’ stagflations, have clearly shown that any attempts by central banks to systematically stimulate demand beyond potential eventually lead to more inflation, not to more growth. At the same time, long and variable transmission lags obviate any attempt to fine-tune the real economy by means of an activist conduct of monetary policy.