A protracted downturn in the labour market could have resulted in permanent labour market scarring where unemployed workers find it difficult to re-enter the labour market once the economy recovers.8 Furthermore, after around a decade of CPI inflation being below the 2 percent mid-point of our target range, we were also concerned that inflation expectations could become unanchored below our target.
For instance, following a complaint by an impacted country, the independent assessor could analyse the effects of such policies and come to a judgement on whether they follow the rules of the game. Policies where the benefits are largely domestic, while the costs fall largely abroad, would be especially carefully scrutinized.