Ben Bernanke, when he was chairman of the Federal Reserve Board, was once asked by Liaquat Ahmed, the author of the celebrated book Lords of Finance, as to how confident he was that the theory of quantitative easing or QE would work.
His reply – “The problem with QE is it works in practice but it doesn’t work in theory” – provoked laughter, but it is so true of monetary policy more generally. Monetary policy decision making is always complex and severely testing. It is typically undertaken in an explosion of diverse views, each differing from the other in expressing intensity and fervour.