It is to be managed in accordance with economic and price developments with the aim of achieving noninflationary, sustainable growth. However, monetary policy can realize a stable macroeconomic environment, that in turn would facilitate structural adjustment. This is because firms can confidently undergo forward-looking business transformation only when there is a stable macroeconomic environment.
But how much stimulus will it need and for how long? Our economic models were not built to deal with this kind of situation with extreme levels of Knightian uncertainty. For the present, policy-makers will likely rely heavily on illustrative scenarios to guide their decisions.