According to a paper presented in Jackson Hole, the global long-run neutral level of central bank’s interest rates was pushed down by many global factors.
Some economists argue (Megan Greene, Financial Times, 30 August 2019) that when monetary policies diverge globally, they affect exchange rates, current accounts, credit flows and growth, and thus central banks can no longer afford to act in isolation.
On the contrary, they can and will.
Fiscal policies will differ across countries, government policies will diverge, and all of this will result in diverging monetary policies by both major and smaller central banks.
Governor Matolcsy, MNB, the central bank of Hungary
