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Elga discusses how conventional and unconventional monetary policy space is limited and rapidly being used up even before central banks respond to the next downturn, let alone a full-blown recession. This is the second in a series of four blogs on the topic of "Dealing with the next downturn."
After a decade of unprecedented monetary stimulus around the world, actual inflation and inflation expectations remain stubbornly low in most major economies. Inflation is falling persistently short of central bank targets, even in economies operating beyond full employment - notably, the U.S. It is even more