Monetary Policy: Practice Ahead of Theory - speech by Mervyn King

In the Mais lecture, delivered this evening at the Cass Business School, City University, London, Mervyn King, Governor of the Bank of England, argues that inflation targeting is the natural way to conduct monetary policy when there is a great deal about its effects that we do not understand and when monetary theory is continuing to evolve.
Published on 17 May 2005

He says that to find a way through the minefield between monetary policy rules, on the one hand, and pure discretion in setting interest rates, on the other, “we need to think more carefully about the nature of decision-making in a complex world where the central bank and economic agents alike are learning about their environment.”

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