Central banks are uniquely positioned to achieve price stability. The economic costs of failing to do so can be quite high.
Despite the well-known benefits of maintaining price stability, there are increasing calls to abandon this commitment in both Europe and the U.S. Central banks are under increasing pressure to act, both because fiscal authorities have been unable to make credible commitments to maintain fiscal discipline and because central banks have been willing to engage in actions that stray into the realm of fiscal policy – for example, purchasing assets of the housing sector.