What does the financial crisis mean for the conduct of monetary policy? The answer may seem obvious. Central banks responded to the seizing up of interbank markets with massive injections of liquidity. When they ran out of room for manoeuvre with short-term rates, they acted directly on the money supply via quantitative easing. So, as conditions stabilise, the question is when and how to tighten without either pushing fragile economies back into recession or letting a serious bout of inflation get under way.

Specific decisions have been widely debated, but there has been relatively little discussion about objectives or the policy-making framework. Since the 1970s there has been a strong political and theoretical consensus – in the UK and in much of the rest of the world – that monetary policy should focus on price stability, and that to do this it should be conducted by an independent authority, pursuing an explicit inflation target (or the money supply as a proximate target). The crisis made policy decisions more difficult but did not, of itself, call the framework into question.