He presented the following lessons from which monetary policy-makers can learn:
· Central bank independence remains critical to delivering price stability, particularly during crises.
· A clearly defined objective of price stability is essential to firmly anchor inflation expectations, which can act as an automatic stabiliser during a crisis.
· Monetary policy should be oriented at the medium term. Trying to fine-tune monetary policy on the basis of indicators, such as output gaps and measures of core inflation, which are either subject to ex post revisions or are misleading, may – and often does – induce an excess short-termism and entail serious risks.
· Monetary and financial variables should be a key input in the assessment of medium- to long-run risks to price stability, particularly during financial crises.
· Finally, price stability and financial stability are complementary. The new macro-prudential function and monetary policy reinforce each other.
© ECB - European Central Bank
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