With hindsight, the significant change in 1997 was giving the Bank of England independence, building confidence that monetary policy would not be positioned for political convenience.
The inflation target, which proved reasonably easy to meet over the first decade during which the MPC (KOSDAQ: 050540.KQ - news) set interest rates, arguably caused policymakers to focus on inflation to the exclusion of worrying about broader economic imbalances.
Therefore it is necessary to think again about what the monetary policy framework should be. Suggestions include a range for inflation, with the MPC able to say at any time where in that range it was appropriate to focus.
This would enable the impact of imported inflation, whether high or low, to be accommodated more readily. Moving away from always looking two years ahead would bring further flexibility - of course, the MPC should be obliged to justify its stance at any time, as is the case now.
I find nominal GDP, including the level of nominal GDP, less attractive. Monetary policy does not determine the long-run growth rate, which is the result of labour market behaviour and other structural factors.
There may be periods, however, in which a more expansionary monetary policy when growth is weak can mitigate the risk of future weak growth (due to factors such as too many people losing touch with the labour force).
And so the present is a time when keeping growth going is indeed very important. So it might be helpful to consider committing to low interest rates until unemployment has fallen to a particular level, as in the US.
Such a commitment, however, always has to be conditional, if inflation started to rise unexpectedly strongly a central bank would always wish to have the flexibility to react.
The present situation is also one in which there seems to be a diminishing ability for monetary policy to affect growth very much. Of course it would be possible to create inflation, and some argue that would be desirable in order to reduce the burden of public sector and household debt in real terms.
But the consequences in terms of the distribution of winners and losers would be marked, and there would also be a loss of credibility in future low inflation policy.
It is not easy to determine the right balance between rules and discretion when delegating to an independent central bank. A more radical approach now might be to say that, apart from an overarching commitment not to allow inflation to spiral out of control, the central bank should be able to change its approach to monetary policy, as appropriate to the economic circumstances at the time.
The rationale would need to be set out, and in normal times (which may be rarer than we believed in the early 2000s) something like a 2 percent inflation target would probably again be the right goal.
This might be seen as giving the Bank too much power. But it would be a more mature approach to policy than keeping a more precise target at all times.
Kate Barker is a former member of the Monetary Policy Committee .