For instance, the monetary and fiscal policy tightening which took place in Japan in 1997 has been considered by some as a case of premature exit, responsible for the Japanese recession of 1998-99.
Chart 1 suggests that in the most recent period during the turmoil, bank lending rates departed from their usual co-movement vis-à-vis EONIA.5 More formal empirical pass-through results suggest that despite the tensions in the unsecured money market and the resulting widening of the EURIBOR-EONIA spread up until October 2008, euro area banks so far seem to be continuing to adjust their short-term retail rates to changes in the term money market rates (see Charts 2 and 3).6 Thus the persistence of money market tensions is hampering the smooth transmission of monetary policy.