Unconventional monetary policies and the conservative central banker principle: two interpretations

Jakub Janus and Krystian Mucha

Chapter 10 in Are Central Banks Still Conservative?, 2025, pp 231-249 from Edward Elgar Publishing

Abstract: The aim of the chapter is to assess unconventional monetary policies (UMPs), such as forward guidance and quantitative easing, through the lens of Rogoff's (1985) conservative central banker principle. After reviewing Rogoff's original proposition and the notable changes in the practice of monetary policy since the Global Financial Crisis, we offer two possible interpretations of the conservative central banker principle vis-à-vis the UMPs. The first one, which we call the ‘narrow’ or ‘literal’ interpretation, draws attention to the revealed and hidden costs of UMPs for central banks, especially for their credibility and independence. The second interpretation, which we dub ‘broad’, posits that Rogoff's conservative central banker principle is in fact consistent or even supportive of mitigating adverse shocks and the effective lower bound using UMPs, primarily because it reinforces the central bank's commitment to stabilise the inflation rate during crises. By critically discussing both the practice of UMPs and related literature, we assess numerous arguments supporting both interpretations. We conclude by emphasising the role of central banker preferences for the implementation of UMPs.

Keywords: Conservative central banker; Zero-lower bound; Unconventional monetary policy; Quantitative easing; Forward guidance; Central bank commitment (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035337569
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