1/5  not necessarily reflect the views of other members of the Board of Governors or the Federal Open Market Committee. Monetary policy credibility and inflation performance outcomes Does monetary credibility help secure lower inflation, less-variable inflation, and inflation that is less sensitive to shocks?
Low and stable inflation must start with sound policy--that is, policy that keeps output near potential and offsets shocks to supply and demand appropriately. But beyond that, common intuition and numerous academic journal articles, a few of which I will discuss shortly, suggest that credibility can greatly enhance the virtues of sound policy.