Second, the central bank must decide whether more or less macroeconomic stimulus is needed.
For many central banks, this is guided by an explicit (or implicit) inflation target, since keeping inflation low, stable, and predictable is generally accepted as the best contribution that a central bank can make to the economic well-being of its nation's citizens.1 The value of having such a clear and credible target will be explored in more detail a little later in these remarks.