Economic analysis is the process of combining economic data, models and expert judgment to understand current conditions and inform monetary-policy choices. It assesses how demand, supply, labour-market conditions and prices are evolving, explores alternative explanations for those developments, and estimates how the economy may perform over time. Analysts also study longer-lasting changes in productivity, institutions and behaviour that can alter inflation pressures and the economy’s sustainable capacity. Where averages may obscure meaningful differences, they draw on information about particular groups, industries or businesses, including survey responses and other high-frequency indicators. The resulting assessment helps policymakers judge the outlook and the likely effects of their decisions on economic activity and inflation.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.