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Monetary policy in times of uncertainty: a reappraisal of the Brainard principle
At the press conference on 7 March 2019, ECB President Draghi, explaining the decisions of the Governing Council, stated that “[t]he fact that the climate has become more uncertain doesn't mean that one has to stay put. You just do what you think is right and you temper, however, what you are doing with a consideration there is uncertainty. In other words, in a dark room you move with tiny steps”. This is indeed a popular argument among monetary policymakers, frequently referred to as the ‘Brainard conservatism principle’ (Brainard 1967). However, such a principle, which calls for a more cautious policy in ... (full story)