That era of oil price shocks posed a major challenge to monetary policymakers. It became evident that countries with independent central banks had significantly lower inflation rates than those in which central banks followed politicians’ instructions – while simultaneously achieving equal or even higher levels of growth.
What we learned back then was that price stability does not run counter to economic prosperity, but complements and steadies it. But we learned something else, too. That an independent central bank is necessary for stable prices; but more than that is needed.