Everything points in the same direction: Highly expansionary monetary policy as long as the economy has not fully returned to full employment

In the past, monetary policy was symmetrical: when the unemployment rate was higher than average, it was expansionary; when it was lower than average, it was restrictive. But today, monetary policy has become asymmetrical: it is expansionary as long as the economy has not fully returned to full employment. This asymmetry can take several forms: It can be explicit: Jerome Powell has said that the Federal Reserve’s decisions will from now on be guided by the “shortfall of employment from its maximum level” and no longer by deviations either side of full employment. It may result from a de facto move to “price level targeting”, which is equivalent to “average inflation targeting”. This is also what J. Powell implies when he says that if inflation has been lower than the 2% target, it must subsequently be higher than 2% so that average inflation in the long term is 2%. This means that monetary policy would remain expansionary for a very long time in the economic cycle. If the sensitivity of inflation to unemployment becomes very low or non-existent, monetary policy would then remain constantly highly expansionary; It may also result from a move to “yield curve control”, as monetary policy would then remain highly expansionary regardless of the economic cycle; It also results from the application of “overheating” theory: keeping a policy of demand stimulus in place even when the unemployment rate is low in the hope that this will drive up the employment rate, production and therefore potential growth.