Towards a new framework for monetary policy

A number of central bankers and their economic advisors consider that monetary policy played little or no role in the run-up to the crisis. On this view, the financial upheaval was mainly the result of an external macroeconomic shock, made worse by the imprudent behaviour of some financial institutions. Their argument can be summarised as follows: • inflation (CPI) has been low and stable in recent years, showing that the fundamental objective of monetary policy (price stability) has bee