Monetary policy lessons learned from the crisis and the post-crisis landscape

Remarks by Mr Stephen G Cecchetti, Economic Adviser and Head of Monetary and Economic Department of the BIS, prepared for the SEACEN-CEMLA Conference, Kuala Lumpur, 13 October 2011.

Abstract

In my remarks, I would like to examine three main themes, drawing out the main lessons from the crisis for central banking in the post-crisis era. They are:

  • The future of inflation targeting
  • The future of central banks' operational frameworks
  • The future of global central bank cooperation

It is immediately clear to everyone here that we have seen each of these aspects - inflation targeting, central banks' operational frameworks and global central bank cooperation - put to the test. In each case, the experience of the last three years has changed the way in which we do and should think about how central banks go about meeting their macroeconomic stabilisation objectives. But, not only do these lessons influence how we formulate policy frameworks, they also have implications for how we should go about constructing a credible and consistent governance structure. After all, governance is the enduring core of central banking. Without appropriate governance arrangements, policymakers cannot even set out on the difficult path that they need to follow.