Maintaining credibility for the conduct of monetary policy A second guiding principle for monetary policy conduct is that a central bank cannot ignore the promises – implicit or explicit – made in the past, when designing present policy.
In a world of imperfect knowledge and bounded rationality, the track record of a central bank is the only guide for the public to build a view on the true objectives guiding monetary policy, the authentic motives that direct its actions, over and beyond the official purposes that it openly professes.