Monetary policy helps inequality in the short and long-term
BIS 21 – Bank for International Settlements
“2021 Annual Economic Report,” Bank for International Settlements, June 2021, https://www.bis.org/publ/arpdf/ar2021e.pdf
Inequality and the conduct of monetary policy
Inequality influences the conduct of monetary policy and, in turn, the conduct of monetary policy influences inequality over the business cycle. On the one hand, the distribution of income and wealth shapes monetary policy’s impact on and transmission to economic activity as well as the broader political and social context in which the central bank operates. On the other hand, monetary policy can influence inequality: it can do so directly in the near term, through changes in stance; and above all indirectly, over the business cycle, by seeking to keep inflation under control and to limit recessions and hence unemployment.