The intellectual underpinnings of the emphasis on price stability can be traced to Milton Friedman’s and Ed Phelps’ critique of the Phillips curve in the late 1960s. On a brief personal note, I was privileged to have been taught macroeconomics at LSE by A W Phillips. Professor Phillips was an excellent teacher who made contributions in many areas of macroeconomics.
In fact, it is well known that Milton Friedman tried to recruit him to the University of Chicago, but, fortunately for LSE, he declined. The Phillips curve expressed the idea of a trade-off between inflation and unemployment. The Friedman-Phelps insight, which helped earn those economists their respective Nobel prizes, was that the trade-off was, at best, temporary.