The Governor argues that at present there is a remarkable consensus on what macroeconomic policy can be expected to achieve, namely stability. But the really interesting questions are about what policies can best achieve stability. The task is complicated by imperfect information and because economies are subject to various kinds of economic shock. The Governor argues that we cannot aspire to continuous stability because we do not have sufficiently reliable information on the rate of change in the supply-side capacity of the economy, or sufficient control over aggregate demand in the short term, and there is the ever present possibility of shocks. The question then is, given these uncertainties, which macroeconomic variable is it most sensible to target? The Governor considers three broad choices—nominal external anchors, real domestic targets and nominal domestic anchors—and summarises the United Kingdom’s experience with the last, namely an explicit inflation target.