With imperfectly competitive product and labour markets, firms and employees can affect - at least partially - the price and wage dynamics on a local scale, resulting in stronger inflationary pressure and structurally grounded inflation dynamics that have to be met with more restrictive monetary policy.
In those days, central bank independence was not perceived as a crucial issue. The central bank shared with the Government the responsibility for key economic policy decisions, and implemented those decisions using the powers it had on the financial market and on banks.