The study analyses the effects of reductions in long-term inflation expectations on growth and inflation, and focuses on the role that monetary policy can play in counteracting these adverse effects.
The marked decline in long-term inflation expectations between 2013 and 2015 in the euro area contributed to keeping inflation at historically low levels. Had the ECB not adopted a very accommodative monetary policy, by means of non-standard measures, the decline in inflation would have been larger. The paper highlights the importance of monitoring long-term inflation expectations in the conduct of monetary policy.
Published in 2023 in: European Economic Review, v. 154, Article 104426.
