Brave new world (of monetary policy) – Is the era of inflation-rate targets coming to an end?
In the current environment, policy makers at major central banks, who manage the ups and downs in their country’s economy from a monetary-policy perspective, have to solve two key conundrums. Firstly: Why is inflation still so low, even after many years of ultra-expansionary monetary policy? And secondly: What tools can be used to respond to the next economic downturn, given that interest rates are already very low? This is the focus of the current work of our Portfolio Management Research and Investment Strategy.