So, there is little merit in an unconditional monetary policy response to asset price changes. The policy response should be conditional. And the critical condition that a central bank should ascertain before judging if an asset price trend is policy-relevant is whether the market trend is causing – and/or is being fed by – a concomitant monetary imbalance.
Labour market institutions in many European countries are slowing down the process of economic restructuring In their present form, the labour market institutions in many European countries are slowing down the process of economic restructuring and hampering the pace of employee allocation between sectors. High and persistent unemployment makes fiscal consolidation more challenging, and hampers the monetary transmission mechanism.