Central bank independence with procedural accountability

Independent central banks must be effectively accountable, particularly when they engage in discretionary policies during a crisis. We argue that ex post assessment of central bank performance is insufficient for proper accountability. Using the inflationary episode that followed the Covid-19 pandemic, we show that a central bank explicitly committed to an inflation-targeting rule can deviate substantially from its target, with the extent of the deviation being identified only once it is already too late to correct it. We propose ‘procedural accountability’, a comprehensive framework for monetary policymaking. Drawing on the gold standard experience and existing rule-based proposals, we specify the minimal formal architecture any such regime must satisfy.