We should recall that these uncertainties may have been compounded by the regime shift associated with the transition to Stage Three of Economic and Monetary Union. The changeover to the single currency may have altered the way expectations are formed in the euro area. It may thus have changed the effects of monetary policy on financial behaviour, consumption, investment and wage bargaining.
Or, to summarise, it may have changed the very nature of the monetary transmission mechanism in the euro area. In such an uncertain environment, monetary policy analysts must use a “full-information approach” and carefully cross-check the signals sent from different types of indicators.