That being said, as our mandate focuses on inflation and our models typically ignore financial stability aspects, discussing trade-offs remains difficult, both in theory and in practice. Current policy issues So, what does this mean in terms of policy-making in the coming weeks and months? The most obvious observation is that uncertainty is very high.
Beyond that, I am afraid that policy-making is becoming a matter of faith. Informed faith, but faith nonetheless. The greater the reliance on standard models and low r* estimates, the greater the temptation to argue in favour of a gradual and moderate monetary policy response.