Over the long run, monetary policy has a stronger impact on controlling inflation than on shaping unemployment levels, which tend to stabilize around a structural equilibrium influenced by labor market dynamics, education systems, and technological progress. While stimulative measures (like cutting interest rates) can create temporary job growth, persistently trying to suppress unemployment below this equilibrium triggers rising inflation as businesses and workers adapt their price and wage demands. Conversely, overly tight policies might cause lasting harm if prolonged joblessness erodes skills or labor participation. Central banks that maintain credibility in keeping inflation expectations steady help prevent destabilizing price spirals, as shifts in money supply ultimately influence nominal values like prices rather than real economic output. For lasting stability, policymakers prioritize managing inflation, recognizing that unemployment is driven by deeper structural factors beyond the reach of monetary tools alone.

Monetary Policy has no effect on the balance or what is called as 'trade off' between inflation and unemployment . However in the short run by preferring more inflation , it can reduce unemployment . Or if the monetary authority prefers less unemployment than the natural rate of unemployment , it will produce more inflation . Generally , the monetary authority has both the objectives of price stability and economic growth and employment.

In the longrun,many economists believe that monetary policy is neutral, which means output remains the same and changes in money supply only changes the price level or inflation. Sustained high inflation can lead to higher unemployment.

Dear Researchers, Scientists, Friends,

The decisions made by central banks regarding monetary policy play a crucial role in shaping the long-term balance between inflation and unemployment and remain a key subject of interdisciplinary macroeconomic research. Current scholarly debate focuses on the extent to which it is possible to maintain a low unemployment rate without triggering accelerating inflation, and whether there exists a stable threshold beyond which expansionary measures lose their effectiveness. These considerations become particularly relevant in the context of prolonged low interest rates following the global financial crisis and during the COVID-19 pandemic. Emerging research questions in this area may include the impact of monetary policy on income and wealth inequality, the role of inflation expectations in shaping investment decisions, the effectiveness of unconventional monetary instruments such as quantitative easing, and the interaction between monetary and fiscal policy under conditions of high public debt. In light of structural changes in the labor market driven by digital transformation and automation, future studies should also examine how monetary policy influences employment in technologically sensitive sectors. I would like to sincerely thank all researchers and scholars contributing to the development of this vital topic by providing valuable empirical data and new theoretical perspectives. At the same time, I express my openness to academic collaboration in this field—whether through joint research projects or publications. I also warmly invite everyone to continue the discussion and deepen our reflection on the effects of central bank decisions, which are of key importance for macroeconomic stability and social well-being.

Best wishes,

Dariusz Prokopowicz

In the long term, effective monetary policy can help maintain a balance between inflation and unemployment through the Phillips Curve trade-off, though this relationship weakens over time; sustained low inflation and predictable policy encourage stable employment, but overly aggressive policy can distort this balance.

In the long run, monetary policy mainly affects inflation (as per classical dichotomy), while its short-run trade-off with unemployment is described by the Phillips Curve.