The new normal is likely to be characterized by a lower level of interest rates than in the decades preceding the crisis, which counsels a cautious and gradual approach to adjusting monetary policy. The Benchmark Neutral Rate The appropriate pace and target for normalizing monetary policy depend centrally on understanding the neutral rate of interest.
This credibility is primarily rooted in the institutional setting of the ECB enshrined in the Maastricht Treaty. The constituent features of the institutional framework for the single monetary policy are: •  a clear mandate to safeguard price stability in the euro area, and  •  full independence of the ECB in the pursuit of this mandate.