Price Stability and World Economic Recovery

During the past decade, we have enjoyed considerable success in reducing inflation. Despite an unusually long economic expansion, rates of inflation did not accelerate much during the 1980s. While this is heartening, I do not mark our success solely by the numbers; indeed, inflation remains unacceptably high. Instead, I find encouragement in changing attitudes, in both the United States and Europe, about the proper role of monetary policy. Policymakers and academic economists increasingly accept the view that monetary policy can promote stable economic growth only by focusing on long-term price stability.