The current extraordinary situation poses a challenge to conventional tools in assessing the macroeconomic ramification of the sharp and sizeable re-orientation of the monetary policy posture and its effects on the various channels through which it affects demand and inflation (exchange rate, consumption, investment, expectations, bank lending, assets prices, etc.).
A set of models designed to assess the impact of monetary policy suggests that the tightening may have significantly larger effects than estimated through standard projection tools. 16.