Central bankers are shifting the goalposts on responsibility

THE theme of this year's meeting of the world's central bankers in Jackson Hole, Wyoming, had little to do with monetary policy. "Fostering a Dynamic Global Economy" is, of course, an important topic. But it is telling that the European Central Bank (ECB) chose, for its own annual gathering, a similar "non-monetary" topic ("Investment and Growth in Advanced Countries").

There is nothing wrong with central bankers considering challenges in areas such as growth, trade and investment. But central banks were made independent precisely because it was understood that they would be held accountable for achieving their own objective of maintaining price stability, regardless of the economy's underlying growth rate. So why is it that central bankers would rather look at external issues than focus on their own area of responsibility?

The answer, it seems, is that they cannot quite explain their current approach. Conditions today are very favourable for monetary policymaking, particularly for the ECB - as a brief look at history makes clear. Since the creation of the Economic and Monetary Union (EMU) in January 1999, the ECB has been solely responsible for determining the EMU's monetary policy. (Although national currencies remained in circulation until 2002, exchange rates were "irrevocably" fixed from 1999.)