In the 1970s, financing conditions tightened to an extent that made capital accumulation prohibitively expensive. Our current policy is calibrated to avoid such very bad outcomes. [11] A determined reaction to the risk that inflation may become entrenched not only safeguards price stability but also provides the conditions under which the green transition can thrive sustainably.
Indeed, while the cost of credit has become more expensive because of our actions, financing conditions remain favourable from a historical perspective. Measures of real long-term interest rates, for example, which matter most for green investments, remain low in historical comparison (Slide 3).