The debate about monetary policy for most central banks is usually set in the context of a trade-off between squeezing out inflation and the ensuing rise in unemployment that this creates. We can look at historical reaction functions during previous business cycles and try to apply these with tweaks to the current situation. However, the current situation is like nothing we have ever seen before, and for this author, that covers a period of over three decades. In short, there is a lot of guessing going on these days, and probably as much guessing inside central banks as outside them. That makes high-conviction calls ... (full story)