The near universal acceptance of price stability as the overriding goal of monetary policy derives from the recognition that, in the long run, monetary policy impacts on the price level and its dynamics. Consequently, policy instruments at the disposal of central banks should be capable of influencing the price level and expectations in the desired direction, toward the achievement of non-inflationary economic growth.
The issue that arises at this juncture is whether the central bank’s pursuit of price stability and financial sector soundness is the only requirement to sustain the development process.