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Former Bank of England Governor Mervyn King, Commenting on a Speech

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Essay

Former Bank of England Governor Mervyn King, commenting on a speech given by then Fed Chairman Greenspan, said "any (coherent) monetary policy can be written as an inflation target plus a response to supply shocks." What do these comments mean and what insight do they provide us to the focus of central banks?


Definitions:

Confidence interval

A reach of numerical outputs, from sampling statistics, with the potential to cover the hidden value of a population parameter.

True proportion

The actual ratio or fraction of individuals or items within a population that possesses a particular characteristic.

Random sample

A sample drawn from a population in such a way that every member of the population has an equal chance of being selected.

Confidence interval

This statistical term refers to a calculated interval with an associated confidence level that expresses where the true parameter of the population is expected to lie.

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