Monetary policymakers giving significant weight to low-probability events face several challenges. One serious potential pitfall is paying so much attention to the tails of the distributions of possible outcomes  BIS Review 60/2004  3  that the central tendencies veer well away from objectives for economic and price stability - in effect paying too much for insurance.
Since then, developments - and debates - have underlined just how important the nonstop emphasis on stability is. I would like to briefly comment on three issues that stand out in this respect. They also link the Stability Foundation’s academic approach to central banking in practice. 1. Over the decades, inflation was occasionally declared dead.