Interestingly, and perhaps contrary to some impressions both in New Zealand and abroad, achieving this marked improvement in inflation performance was not bought at the cost of an increase in output volatility.
The Congress, through the Federal Reserve Act, sets the Federal Reserve’s goals and oversees it, but the Federal Reserve decides independently how to achieve its congressionally mandated goals. The ability to make monetary policy decisions that are free of short-term political influence is critical for central banks. This capability is especially true because the effective conduct of monetary policy requires a long-term perspective.