Instead, Ricardo reasoned, central banks must be governed by individuals who should be “entirely independent” of the government, and who “should never, on any pretence, lend money to the Government, nor be in the slightest degree under its control or influence”. Clearly, Ricardo’s original ideas are still valid today, for most of the world’s major central banks enjoy a substantial degree of independence.
What is the implication of this unexpected slack? The policies we have undertaken, especially since 2014, have been quite successful in getting us closer to our inflation aim. But there are uncertainties about the process of inflation, given factors like globalisation and technological changes.