Monetary policymakers face significant challenges. To be successful, they require

a. Accurate estimates of potential GDP, even when its growth trend is shifting.

b. An understanding of how to cope with the problems created by the effective lower bound on nominal interest rates and the possibility of deflation.

c. A knowledge of how and when to react to the possibility of a stock or real estate boom (and bust).

d. An awareness of the changing structure of the financial system and a knowledge of how to react to it.