Strategy and Tactics of Monetary Policy: Examples from Europe and the Antipodes

What we shall concentrate on in this paper is the way in which the strategy and tactics of monetary policy are currently being articulated in this current context. We document in Section 2, the common adoption of price stability as the overriding priority. This does not, however, prevent the adoption of subsidiary objectives. While price stability has now been generally accepted as the dominant objective for Central Banks monetary policy, the term `price stability has most often not been defined, either legislatively or in practice. We shall discuss some possible alternative definitions, and the pros and cons of adopting them in this Section, eg the choice of index and whether the objective should be expressed in terms of a price level, or rate of inflation (eg zero).