Monetary Policy & Price Stability

330 BC

Alexander the Great's empire experienced one of the earliest documented inflations after the conquest of Persia

The conquest of the Persian Empire released vast quantities of precious metal into circulation, producing one of the first recorded general price rises. It established that sudden infusions of commodity money could destabilise prices long before any deliberate monetary policy existed.

1st–3rd century · 2026 years ago

Roman emperors progressively debased the silver denarius to expand the money supply

At Nero's accession the denarius contained over 90% silver, but by the 270s hardly any silver remained. Debasement let the state issue more coins and profit from seigniorage while reducing each coin's value, an early demonstration of monetary expansion as a cause of inflation.

3rd century · 1826 years ago

Roman Empire under Diocletian suffered rapid inflation at the end of the third century

The reign of Diocletian saw another episode of rapid price increases following sustained coin debasement. It is among the best-documented pre-modern inflations in Europe.

301 AD · about 1,725 years ago

The Roman Emperor Diocletian tried to halt inflation by decree

The Edict on Maximum Prices set legal ceilings on the prices of goods and wages across the empire, backed by the threat of death for violators; the attempt to control inflation without addressing currency debasement failed within a few years.

1324 · 702 years ago

Mansa Musa of Mali depressed the price of gold in Egypt through lavish spending during his hajj

Passing through Cairo, the Malian king distributed so much gold that the mithqal fell from above 25 dirhams to no more than 22, and prices remained depressed for about twelve years. Contemporary Arab historians recorded the episode as a clear case of a commodity-money supply shock.

1550–1700 · 476 years ago

Early monetary thinkers produced the first formulations of the quantity theory of money

The price revolution led several writers to connect the volume of money in circulation with the general level of prices. This became the intellectual foundation for later monetary approaches to inflation control.

15th–17th century · 626 years ago

Western Europe underwent the price revolution as New World bullion flooded in

From the second half of the 15th century to the first half of the 17th, average prices rose perhaps sixfold over 150 years, attributed largely to gold and silver arriving in Habsburg Spain from the Americas alongside post-plague population recovery. It was the first sustained, well-documented inflation of the modern era and prompted the earliest systematic theorising about its causes.

17th–18th century · 426 years ago

Adam Smith gave the real bills doctrine its first authoritative exposition in The Wealth of Nations

An alternative to the quantity theory, the real bills doctrine held that note issue backed by genuine commercial paper could not be inflationary. It framed one side of the monetary debates that dominated the following century.

18th century · 326 years ago

Many countries adopted fiat currency, enabling far larger swings in the money supply

Moving away from commodity money removed the physical constraint on issuance, making both rapid monetary expansion and hyperinflation possible. Subsequent political crises repeatedly produced inflation rates far above anything seen under commodity money.

19th century · 226 years ago

British Currency and Banking Schools debated whether note issue should be tied to gold reserves

The Currency School held a quantity theory view that Bank of England note issues should vary one-for-one with its gold reserves, while banking schools disagreed. Banking school views held greater sway in the United States and Britain, currency school views on the continent, notably in the Latin and Scandinavian Monetary Unions.

late 19th century · 226 years ago

Irving Fisher and quantity theorists debated supporters of bimetallism over the determinants of prices

Fisher led the quantity theory camp against advocates of a bimetallic standard. The contest shaped how monetary authorities understood the link between metal reserves and the price level.

1923 · 103 years ago

Weimar Germany watched its currency collapse in one of history's defining hyperinflations

Prices doubled every few days at the peak, wages were paid twice daily and spent immediately, and the mark's collapse became the reference case for how the deliberate financing of deficits by printing money can destroy a currency entirely.

1930s · 96 years ago

The gold standard was found detrimental to stability and employment, notably during the Great Depression

Prevalent before the First World War, the gold standard constrained monetary responses and was associated with major deflation in the 1930s. Its perceived failure motivated the search for discretionary monetary frameworks for controlling prices.

1936 · 90 years ago

John Maynard Keynes published The General Theory of Employment, Interest and Money

Keynes argued that wages and prices are sticky in the short run but respond gradually to aggregate demand shocks. This underpinned the post-war demand-management approach to managing inflation and unemployment.

1948 · 78 years ago

West Germany introduced the Deutsche Mark to end postwar monetary chaos

A currency reform swept away the inflated Reichsmark and the black markets that had replaced it, an abrupt stabilisation credited with helping to launch the rapid postwar recovery later known as the economic miracle.

1958 · 68 years ago

Alban William Phillips published evidence of a negative relation between inflation and unemployment

The Phillips curve gave policymakers an apparent menu of trade-offs between price stability and employment. It described the US experience of the 1960s well but failed to account for the stagflation of the 1970s.

1960s · 66 years ago

Milton Friedman and the monetarists challenged Keynesian doctrine by reviving the quantity theory of money

Friedman argued that inflation is always and everywhere a monetary phenomenon, driven above all by the growth rate of the money supply. Monetarism reshaped central bank thinking and directly informed money supply targeting in the following decade.

early 1970s · 56 years ago

Robert Lucas, Thomas Sargent and Robert Barro transformed macroeconomics with rational expectations theory

Rational expectations recast inflation as depending on how the public anticipates policy, undermining the idea of an exploitable inflation-unemployment trade-off. The approach became a core component of later inflation-targeting frameworks.

1970s · 56 years ago

The Bretton Woods system disintegrated, leaving major currencies floating against each other

The end of fixed parities removed the external anchor that had disciplined national monetary policy. Central banks were left needing a new domestic nominal anchor for price stability.

1970s · 56 years ago

Many central banks adopted money supply targets on monetarist advice

Following Friedman and other monetarists, central banks aimed for stable growth rates of monetary aggregates as a means of controlling inflation. This was the first widely used replacement for the gold and fixed-exchange-rate anchors.

1972 · 54 years ago

Richard Nixon imposed wage and price controls in the United States

The measures are cited as a notable failure of direct administrative attempts to suppress inflation. Their collapse strengthened the case for monetary rather than administrative control of the price level.

1973 · 53 years ago

The 1973 oil embargo triggered a decade of stagflation across Western economies

Quadrupling oil prices after the 1973 embargo pushed inflation into double digits across the United States, Europe and Japan even as growth stalled and unemployment rose, a combination economists had thought impossible. The simultaneous rise of unemployment and inflation broke the observed Phillips curve relation, vindicating Friedman and other critics of it, discredited the era's dominant approach to demand management, and led economists to broadly accept that supply shocks could independently drive inflation.

1980s · 46 years ago

New Keynesian economists emerged, merging rational expectations with market imperfections

New Keynesians accepted the importance of monetary policy, a natural rate of unemployment and rational expectations while retaining a role for labour and financial market frictions. Debates with new classicals through the 1980s and 1990s produced the synthesis underlying modern inflation policy.

1980s onwards · 46 years ago

Countries with independent central banks held inflation low and stable in the Great Moderation

Central bank independence coincided with a marked moderation of the business cycle and reduced variance in most macroeconomic indicators. It established institutional independence as a key ingredient of credible inflation control.

February 2026 · 6 months ago

Argentina brought annual inflation down to 33 per cent

Consumer prices rose 33.1 per cent over the previous twelve months, a dramatic fall from the peak of nearly 290 per cent reached in 2024 and among the sharpest disinflations of the decade, achieved through deep fiscal cuts and a strict new monetary framework.

• The IMF praised the disinflation as ahead of programme targets

2025 · last year

Zimbabwe's new currency came under renewed pressure a year after its launch

The gold-backed ZiG, introduced in 2024 to replace a hyperinflated dollar, was devalued again as authorities struggled to hold the line, underscoring how difficult durable inflation control has proven for a country that has repeatedly abandoned its own currency.

2025 · last year

Ghana cut inflation by more than half under its new central bank leadership

Annual inflation fell sharply over the year under Governor Johnson Asiama, helped by a stronger cedi and tighter monetary policy, one of the more notable turnarounds among African economies that had struggled with persistently high prices.

2025 · last year

The Bank of Japan faced sustained inflation for the first time in a generation

Core consumer prices ran at or above the bank's long-elusive 2 per cent target for an extended period, a historic change after decades in which Japan's persistent challenge had been too little inflation rather than too much.

• Japanese workers won the largest wage increases in decades

2025 · last year

China battled deflation rather than excess inflation

Consumer prices hovered near zero or slipped into negative territory for extended stretches, prompting Beijing to roll out stimulus measures aimed at lifting demand, a reminder that inflation control can mean pushing prices up as much as holding them down.

2025 · last year

The Reserve Bank of India kept inflation inside its target band, opening room to cut rates

Consumer price growth held mostly within the RBI's 2 to 6 per cent tolerance range, helped by softer food prices, giving the central bank enough confidence in the inflation outlook to lower its policy rate over the course of the year.

2025 · last year

Pakistan achieved one of the fastest disinflations in the world

Annual inflation fell from nearly 38 per cent in 2023 to the low single digits, a collapse tied to a tight IMF-monitored monetary stance, a stronger rupee and high base effects from the previous year's price surge.

• The State Bank of Pakistan cut its policy rate as price pressures eased

2025 · last year

Nigeria kept raising interest rates as inflation stayed above 30 per cent

Despite the central bank lifting its benchmark rate to 27.5 per cent, the highest in the country's history, food and headline inflation remained painfully high, feeding cost-of-living protests and testing the limits of monetary tightening alone.

2025 · last year

Egypt cut interest rates as inflation eased from crisis-era highs

The central bank began loosening policy after annual inflation fell from the roughly 38 per cent peak reached in 2023 to well under half that level, a recovery credited to the 2024 currency float and two years of sustained high rates.

2025 · last year

Turkey saw annual inflation fall below 40 per cent for the first time in three years

Years of an interest rate held at 50 per cent finally pulled headline inflation down from the 75 per cent highs of 2024, though prices were still rising faster than in almost any other Group of Twenty (G20) economy.

2023 · 3 years ago

G7 central banks had all effectively converged on inflation targeting

By this point the European Central Bank and the Federal Reserve had adopted the main elements of inflation targeting without formally using the label. Denmark remained the only OECD country with a fixed exchange rate, pegged to the euro.

December 2021 · 5 years ago

Federal Reserve chairman Jerome Powell declared the money supply–inflation link ended about 40 years ago

Powell attributed the breakdown to financial innovation and deregulation. The statement reflected central bankers' abandonment of monetary aggregates as an operational guide to inflation control.

November 2021 – January 2022 · 5 years ago

University of Chicago Booth School of Business surveyed economists on the drivers of the US inflation surge

More economists agreed than disagreed that the supply chain crisis would not raise long-term inflation above the Fed's target and was not the main driver, but that combined fiscal and monetary stimulus risked prolonged higher inflation. The surveys captured the live policy dispute over how to respond.

2021–2023 · 5 years ago

Most countries experienced the 2021–2023 inflation surge

Inflation peaked in 2022 and declined in 2023, driven by expansionary fiscal and monetary policy after the COVID-19 pandemic, global supply chain disruption and an energy crisis worsened by the Russian invasion of Ukraine. It was the first major test of inflation-targeting regimes since their widespread adoption.

2019 · 7 years ago

Thomas M. Humphrey and Richard Timberlake published a monetary history of the real bills doctrine and the Fed

The work examined sources of monetary disorder between 1922 and 1938. It revived scholarly attention to the doctrinal roots of central bank policy errors.

October 2018 · 8 years ago

Venezuela recorded the world's highest hyperinflation rate of 833,997% annually

The episode ranks among the most extreme inflations ever measured. It demonstrated the continued capacity of fiat currency regimes in political crisis to lose price control entirely.

2008 · 18 years ago

Zimbabwe suffered one of the worst hyperinflations in recorded history

Monthly price rises became so extreme that official statistics stopped being meaningful, prices doubled every day or so at the peak, and the government eventually abandoned its own currency altogether in favour of foreign currencies.

2007–2015 · 19 years ago

Government of Argentina under Cristina Kirchner was criticised for manipulating official inflation data

Critics alleged that inflation and GDP figures were falsified for political advantage and to reduce payments on inflation-indexed debt. The episode illustrates how measurement integrity underpins credible inflation control.

2005 · 21 years ago

Turkey dropped six zeros from its currency after decades of chronic inflation

The redenomination from the old lira to the new lira was a symbolic and practical break from a currency that had lost so much value that Turks routinely carried around millions in banknotes for everyday purchases.

1994 · 32 years ago

Brazil launched the Plano Real to end decades of hyperinflation

A new currency introduced alongside fiscal reform and a temporary exchange rate anchor brought inflation down from levels above 2,000 per cent a year to single digits within a few years, becoming a widely studied model of successful stabilisation.

• Fernando Henrique Cardoso rode the plan's success into the presidency

1990 · 36 years ago

New Zealand became the first country to adopt an official inflation target

The Reserve Bank was set an explicit numerical inflation objective and adjusted interest rates continually to steer inflation towards it. The framework spread rapidly and became prevalent among developed economies.

1990 · 36 years ago

Poland used shock therapy to break post-communist hyperinflation

The Balcerowicz Plan freed prices, cut subsidies and tightened the money supply all at once after decades of state price controls, a rapid and painful transition that brought inflation down from above 500 per cent within about two years.

1985 · 41 years ago

Israel ended triple-digit inflation with an emergency stabilisation plan

A package combining a currency peg, wage and price freezes and deep budget cuts brought inflation down from over 400 per cent a year to under 20 per cent within twelve months, a rare case of a heterodox shock programme working as intended.

1985 · 41 years ago

Bolivia ended hyperinflation almost overnight with a New Economic Policy

Annual inflation above 20,000 per cent collapsed within months after the government floated the currency, slashed the fiscal deficit and froze public wages, one of the fastest successful stabilisations from hyperinflation on record.