Monetary institutions that have been more explicit in delineating what they mean – in numerical terms – by “price stability” have been more successful in promoting lower inflation and lower output variability.3 However, an appropriate mandate is a necessary but not a sufficient condition for lasting macroeconomic stability.
Important sources of instability in inflation expectations could still arise if the central bank – even one endowed with a clear mandate to preserve price stability – is not sufficiently clear as regards its own monetary policy concept and strategy.