Central Bank Reforms and Institutions

“Monetary policy independence remains of the highest importance, and it is important that we preserve monetary policy independence to help foster desirable macroeconomic outcomes and financial stability.” Stanley Fisher (November 2015)
“The only problem our economy has is the Fed. They don’t have a feel for the market.” Donald Trump (December 2018)
Prior to the global financial crisis, there had been much agreement about the optimal institutional design of monetary policy authorities. Economists and policy observers alike would have acknowledged that monetary policy is best left in the hands of independent central banks with a clear mandate of price stability. These inflation-targeting central banks were seen as the solution to the problem of high inflation and were credited with the period of great moderation that saw low levels of inflation and moderate output fluctuations (Alesina and Stella 2010).