Goal independence refers to a situation where the central bank itself can choose the policy priorities of stabilising output or prices at any given point of time, thus setting the goal of monetary policy. Instrument independence implies that the central bank is only free to choose the means to achieve the objective set by the Government. In a recent survey (Fry.
Overall, and even if Canada’s experience was slighty different, recent work suggests that the behaviour of expectations could explain part of the unexpected evolution of inflation in advanced economies since the crisis. The importance of inflation expectations for monetary policy Why are inflation expectations so important for understanding observed inflation?