Since the 1970s, a low and stable inflation has been widely recognized as the main target of macroeconomic policies in a changing context toward a finance-led accumulation pattern. Indeed, the early 1980s was a transition period in terms of monetary policy. Increasingly, the Taylor rule turned out to be the new framework of monetary policy on behalf of the consensus built around its empirical success.
An “inflationary targeting” monetary system emerged in the international economy. The short-term interest rate instrument of the central bank would be adjusted in response to the state of the economy (inflation and production gaps). Beyond the emphasis on the Taylor rule, there has been the belief that the markets, without state intervention, are inherently stable. From this perspective, macroeconomic instability is the result of wrong economic policy options – mainly of those policies that aim to promote economic growth.