Subdued Inflation, Targets and Monetary Policy Cooperation

Andrew Hughes Hallett

Research output: Working paperResearch


This paper examines the case that there has been a structural change in the determination of inflation in the EU (and elsewhere) that has led to a low real-wages, low inflation, slow productivity growth regime. In fact, there appears to have been no structural change. Instead, there has been a marked convergence between the performance of those variables in national economies. The implication is that there is little scope for greater monetary coordination in the conventional sense, or adjusting the monetary rules (e.g., targets), since this uniformity is the origin of the low inflation problem. Outcomes can be improved with better coordination of monetary policy with non-monetary variables. There are two lines of attack. One is a short term approach using conventional instruments (monetary-fiscal, structural or labour market reforms, improving policymakers’ credibility). The other is a long term approach based on improved income distribution, a better distribution of the gains from productivity growth, and stabilisation by means of an external anchor (exchange rate).
Original languageEnglish
Place of PublicationLuxembourg
PublisherPublications Office of the European Union
Number of pages23
ISBN (Print)9789284655021
ISBN (Electronic)9789284655014
Publication statusPublished - Sept 2019
SeriesMonetary Dialogue


  • Economic cycle
  • Economic growth
  • Exchange rate
  • Inflation
  • Monetary cooperation
  • Monetary policy

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