Sri Lanka needs peoples' monetary policy, not rulers': fuss-budget
EconoCautious,
Thank you for your comments. Yes, it is indeed a reversal of a global trend towards a better understanding of monetary policy and more transparency and less discretion.
The problem is not many people debate this issue. They only feel the effects when prices go up and the economy or the banking system collapse. Then they get excited but it is often too late.
Even then people will adduce non-monetary reasons for price inflation. Of course from the point of view of authorities it takes the pressure off them so it is in their interest to foster any stories about ‘cost-push’ inflation. Developed country central bank’s pushed the idea of cost push inflation very effectively in the 60s and 70s.
The Treasury secretary’s speech also contained allusions to that effect. He said:
“Very often with imperfections on market and financial system and structural characteristics particularly with regard to supply side behaviours in commodity markets and external trade, controlling money supply through various instruments may not be sufficient though necessary to control price stability…..Over reliance on such models may also have over simplified the framework for understanding complex socio-economic and real factors affective price.”
However elsewhere, the value of simple rule based monetary policy is now being seen.
A few months ago Philadelphia Federal Reserve Bank President Charles Plosser said this (the relevant report is linked):
A rule-based approach can also lend more transparency to policy making, Plosser said, as the public can more easily see when policy is deviating from the norm, and policy makers will be forced to explain their actions.
“Because such a rule is transparent and easy to monitor, it helps the public form expectations of future policy,” he said.
NO
I think is more of an oath like taking an oath of office.
As a doctor are you suppose to turn your back on a patient of give less care because they do not have the monetary means as the next patient.
even though I would not consider it a law perhaps a person who does not practice this might have his or her license to practice review and perhaps revoke for not having their oath taken seriously.
and cocoa