In no way the introduction of an explicit numerical objective for inflation did therefore radically alter its monetary policy framework: rather, by providing a “focal point” for inflation expectations, the only goal of such innovation was to improve the framework’s performance, and to facilitate the central bank’s task within the framework. This naturally leads me to the final part of my speech.
In recent years, an amended Phillips curve – which shifts with the state of expectations – has been made the modelling centrepiece of innovative proposals to conduct monetary policy without explicit reference to monetary aggregates. Part of the academic community, in particular, has advised the European Central Bank to abandon the prominent role it assigns to a careful analysis of monetary aggregates.