If, on the other hand, the problem of weak growth performance is to be addressed, policies designed to stimulate higher levels of economic activity might result in further acceleration of the inflation rate. The need to maintain a delicate balance between the two conflicting objectives is, therefore, obvious.
As a result, these techniques became both less effective and more costly in terms of their impact on market efficiency. Monetary authorities now have a clearer understanding of the limitations of alternative policy measures, as well as more sympathy for indirect, market-based solutions. Monetary policy is now implemented in a more straightforward manner.