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The New Art of Central Banking

Published online by Cambridge University Press:  01 January 2020

Jagjit S. Chadha
Jagjit S. Chadha*
Affiliation:
Professor of Economics, University of Kent; Visiting Professor at the Faculty of Economics at the University of Cambridge; The Mercers’ School Memorial Professor of Commerce at Gresham College, London
*
E-mail: J.S.Chadha@kent.ac.uk
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Abstract

This article outlines some of the intellectual lessons learnt by central bankers during the financial crisis. The key question is whether a broader range of policy options than simple inflation targeting has to be considered in order to limit instability. Interactions with overseas pools of savings, government debt markets and financial risk have all conspired to complicate significantly the task of monetary policymaking. These developments do not mean that the target for inflation has to be modified or dropped but that setting policy will be a more complex task and require more explanation than it has in the recent past.

Keywords

monetary policyquantitative easingmacro-prudential instrumentsE52E58N1
Type
Research Articles
Information
National Institute Economic Review , Volume 234 , November 2015 , pp. R27 - R39
Copyright
Copyright © 2015 National Institute of Economic and Social Research

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Footnotes

This article summarises elements of the Westminster Economics Lecture given in March 2014 at the National Institute of Economic and Social Research, which laid out an agenda for UK monetary policy as we recover from the financial crisis. Some of this article also draws on my Gresham Lecture given in June 2015. I am grateful for comments and conversations with Francis Breedon, Germana Corrado, Luisa Corrado, Mike Dicks, Monique Ebell, Sean Holly, Jack Meaning, James Warren and Alex Waters and any remaining errors are my own.

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