Hawtrey wrote about central banking being an “art” in 1932, he could not possibly have foreseen the policy palette that central bankers would have at their disposal in the 21st century. For that matter, central bankers in the early 2000s could hardly have imagined it either.
When put to the test they proved braver and more creative than anyone – including those within their own ranks – could have expected. Two factors forced them to push the envelope: the end of the Great Moderation and their determination to do “whatever it takes” to keep the economy stable. Pablo Picasso – admittedly a far better artist than your average central banker!