What is the implication of this unexpected slack? The policies we have undertaken, especially since 2014, have been quite successful in getting us closer to our inflation aim. But there are uncertainties about the process of inflation, given factors like globalisation and technological changes.
Mario Draghi raised important questions, which have been discussed among central bankers: what is the non-accelerating inflation rate of unemployment (NAIRU), what is the output gap and how big is the slack? He was exploring the possibility that the degree of slack might be bigger than what you find in classical assessments.