From a recent speech:
During the past decade, the practice of monetary policy changed dramatically in many countries around the world. In some developed countries—the United States and euro area countries in particular—this change in policy was apparent before the global financial crisis, and it showed up as a deviation from the more rules-based policy of the 1980s and 1990s. This policy shift continued after the crisis and spread to other countries in what has been called the Global Great Deviation. It has been characterized by interest rate decisions that differed markedly from the 1980s and 1990s and by unconventional monetary policy actions, including quantitative easing in the form of large-scale purchases of securities. In my view this shift in policy has not been beneficial, but rather has been a factor in the deterioration of economic performance in the past decade.
As this shift away from rules-based policies was occurring in developed countries, the central banks of many emerging market countries were moving toward more rules-based systems of inflation targeting. South Africa, as well as Brazil, Mexico, and the Philippines, all adopted inflation targeting around the turn of the century, and other countries, such as Colombia began implementing monetary policy using the interest rate instrument in a rule-like manner similar to many other inflation targeting countries. In my view, these changes were, for the most part, beneficial. They led to a more stable macroeconomic environment despite significant shocks from abroad—including the global financial crisis itself—and from other non-monetary policy shocks within the countries.
Available for download here.