Monetary Conditions for Economic Recovery: The International Perspective

Abstract

After the long recession which followed the second oil price rise, recovery is now under way in most major OECD countries. Its extent has varied from country to country: while a rapid growth of output and a substantial reduction in unemployment have already been experienced in the United States, growth rates in Europe have so far been more modest and insufficient to bring down unemployment. While the present outlook is generally favourable, there remains concern, particularly outside North America, that the recovery may prove to be fragile, partly due to pervasive obstacles to structural adjustments. Equally, especially in the United States, there is some concern that the recovery may be proceeding too rapidly, threatening a reacceleration of inflation. The task confronting policy makers in the present conjuncture is to ensure that neither of these developments becomes a reality and that a period of sustained recovery ensues. Today I would like to talk about the contribution monetary policy can make in this respect.