The price stability mandate ensures that central banks care more about taking the steps to tackle inflation than elected politicians might (in line with Rogoff 1985’s recommendation to appoint a ‘conservative’ central banker).12 The independence of the central bank prevented undue influence on its operation and also made it difficult for other policy makers to dismiss the ‘conservative’ central banker.
Almost three decades of stable inflation followed the implementation of these institutional arrangements. But the debate about monetary policy, mandates and independent institutions re-opened following the global financial crisis. In part, this resulted from the increased use of ‘less standard’ policy levers, such as the expanded use of central bank balance sheets when interest rates hit the effective lower bound.