Monetary policies after the crisis - Part 1

Monetary policies in advanced countries are still heavily influenced by the 2008-2009 financial crisis even ten years out. Central banks seem to have stayed in crisis management mode. Negative consequences of these new approaches are however starting to be more apparent. In this first part, we will mainly discuss the fact that central banks now seem to base their decisions much more on short-term factors, which seems to go against their desire to signal their decisions far in advance. To maintain their credibility and break out of the continuous monetary easing cycle, central banks should go back to working on a medium-term horizon and make sure to adopt monetary policies that are appropriate for the economic situation.