And the greater predictability of the inflation outlook under a targeting regime should contribute to good long-term economic performance everywhere. Moreover, the automatic-stabilizer feature of targets should reassure those who worry that the central bank is overly concerned about inflation to the exclusion of the real economy. Finally, I would argue that transparency and accountability give autonomous central banks legitimacy in a democratic society.
Since I am persuaded that central bank autonomy provides the strongest guarantee of having a low-inflation monetary policy over time, I believe that it is important to ensure that such autonomy remains acceptable in democratic societies. Only with explicit performance targets will accountability arrangements be truly effective. Inflation-control targets are by no means a miracle solution for monetary policy.