However, this close cooperation does not necessarily imply the loss of central bank independence for the following two reasons. First, a clear mandate of inflation targeting guarantees active monetary policy down the road. The zero lower bound on the nominal interest rate ties the hands of central bankers when it comes to deflation.
As for inflation, central bankers can and should adjust policy rates flexibly if inflation is likely to stay above the stated target. Second, governments well understand the importance of fiscal prudence. In the recent G20 communiqué, the respective governments made a firm commitment to maintaining fiscal sustainability.