Central banks have shown they can take forceful action to head off the most dramatic increase in inflation in a generation. To restore price stability, central banks unleashed the biggest and most synchronised global monetary policy tightening in decades. This episode has shown the value of having independent institutions outside the political process as the guardians of price stability. It also narrows central banks’ room for policy manoeuvre, making it harder to exit from stimulus measures and detangle central bank and government policies. A final lesson is that central banks alone cannot deliver a durable increase in economic growth and prosperity.

Source: The Irish Times July 02, 2024 17:16 UTC