What central banks can achieve Today I want to focus on the responsibility which central banks have for keeping the value of money stable, for keeping inflation low, rather than on their responsibility for the financial system. To what extent do central banks make a contribution to economic growth and social justice by keeping the value of money stable?
Nobody seriously doubts that both hyper-inflation and significant deflation can do real damage to economic growth, and that by avoiding both central banks can make a considerable contribution. But what about the contribution to growth from keeping inflation in low single figures, as compared to the double-digit inflation which both our countries endured during much of the seventies and eighties?