The New Monetary Policy Revolution: - Advice and Dissent

306083 ISBN: 978-1-9162584-5-7 ii THE NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH Occasional Papers LX The New MoNeTary Policy revoluTioN: advice aNd disseNT1 By Philip Turner 1 The phrase “advice and dissent” is borrowed from the title of the autobiography of the former Governor of the Reserve Bank of India, Y V Reddy. [...] Its macroeconomic forecasts in 2007 and 2008 did not recognise that 12 In this paper, views expressed in the main flagship publications (that is, the World Economic Outlook and the Global Financial Stability Report in the case of the IMF and the Annual Report in the case of the BIS) are taken as reflecting institutional views. [...] By the end of the decade, however, worries that central banks had run out of ammunition to fight the next recession had grown.20 Yet the “dash for cash” triggered by the COVID-19 pandemic in March 2020 again elicited a massive and innovative response by the major central banks in the advanced economies. [...] In any event, building public confidence in the ability of the central bank to deal effectively with a crisis is crucial – and this was helped by the public support of the IMF in the years which followed the GFC. [...] Some even argued that the failure of monetary policy in the advanced economies (especially in the United States) to curb asset price booms was the common causal factor of the whole series of recent financial crises, especially in the emerging markets.