The financial crisis caused a dramatic shift in monetary policy. Prior to the financial crisis, central banks used interest rate policy to control inflation. Since then, more unconventional forms, such as QE have had a huge impact on the global economy. However, central banks are now demanding an entire change of emphasis, suggesting that governments should share responsibility in restoring the economy.
Key learning objectives:
What is the Great Moderation?
Identify the monetary policy utilised pre and post-crisis
What should central banks do next?