Monetary policy and its asymmetric effects

It is often said that monetary policy is ineffective, and therefore that raising interest rates is pointless in fighting inflation. And indeed, in the 2010s, central banks were unable to drive up inflation. But the effect of monetary policy is asymmetric. If wage earners’ bargaining power is weak and, as a result, inflation is below 2% at full employment, central banks cannot lower the unemployment rate further if the economy is at full employment, and they cannot drive up inflation. But in the other direction, the situation is different: if a restrictive monetary policy drives up the unemployment rate above the structural unemployment rate by reducing demand for goods and services, inflation falls. Moreover, the higher the debt ratios, the more effective a restrictive monetary policy is. Monetary policy can therefore be asymmetric in its effects: ineffective in driving up inflation, effective in reducing inflation.