As a result, global growth would accelerate and monetary policy would normalise “safely”. Absent sizeable structural reforms, the main risk would be what the report calls an “inflationfirst” scenario, where a rise in inflation would eventually force central banks to increase monetary policy interest rates, which in turn would prevent an acceleration of economic activity.
For example, throughout the crisis the ECB has maintained its “separation principle” under which it orients changes in its policy interest rate toward achieving price stability and focuses its unconventional liquidity and balance sheet measures toward addressing dysfunctional markets.