The Foundations for Central Bank Independence in Retrospect Ultimately the proof of the central bank independence pudding is in the eating. Has central bank independence delivered? The subsequent two decades have clearly seen low inflation.
Somewhat ironically, the problem today is that inflation is too low, which has contributed to the claim that central bank independence, and particularly inflation targeting, is the solution to yesterday's problem. Certainly, up until 2007, the low inflation outcomes did not come at the cost of inferior outcomes in terms of output or employment. This was Mervyn's ‘nice’ decade.