Central banks and governments across the advanced economies from America to the European Union, to Japan, to the United Kingdom, continue to grapple with the post-pandemic supply-chain and energy-price-driven inflationary spike that is impoverishing poorer citizens, straining public and private budgets, and stressing societies.

As central banks hike interest rates to levels not seen in decades, it is fair and appropriate to ask: what were the policy mistakes that contributed to the current painful inflationary period?

Experience and wisdom come from failure, and central banks need to learn from their mistakes in the run-up to this inflationary period, so they are better prepared for the next economic shock, which is sure to come.

A report the Group of Thirty released on November 30 is part of that self-analysis process. The study led by former central bank governors Jacob Frenkel (Israel), Raghuram Rajan (India), and Axel Weber (Germany), with a working group of 18 other former governors and policymakers, including Mervyn King, calls for a humble approach to central banking. The authors say we should be going back to basics, core principles, and economic approaches. Doing so, they say, will strengthen central banks at a juncture when tightened policy and interest rates put them under increasing political pressure.

So, what would a humble approach to central banking be like?

It requires humility about the poor outcomes from central bank economic models and frameworks. When Covid, fiscal stimulus, economic shifts, and then war in the Ukraine hit, many leading central banks delayed by over a year before beginning to raise interest rates; it was just “transitory”, we were assured; it was not.

Central bank economic models designed for a low inflation world, coupled to a data-driven approach (i.e. only act when data is confirmed) slowed reactions to price rises as they leapt higher and higher. Not only were central banks late reacting, attempts to signal policy plans had locked them into commitments that further limited room to manoeuvre, adding to the behind-the-curve response to rising prices.

This laxity when faced by rising inflation did not afflict emerging economy central bankers – they had painful recent memories of high inflation and reacted much more decisively. Being humble thus requires central bankers to be honest about their model, framework, forecasting failures.

Central banks need to return to their core goals, of price stability, economic stability, and financial stability. Price stability in most cases means anchoring inflation with a target – generally 2%. These core objectives should continue to be underpinned by a statutory guarantee of independence for the central bank. For we can see that when times are tough and difficult (albeit late) decisions are needed, independence is always essential.

The Bank of England has that strength, so does the US Federal Reserve, and the European Central Bank. And we can all see the terrible outcomes that arise when central banks are political puppets of their governments, whether that is in Zimbabwe, Argentina, or Turkey, or elsewhere; the economic results are terrible for societies and citizens.

Being humble also means central bankers should avoid committing to large-scale long-term interventions in the economy, as intended and unintended effects are hard to predict, and the longer they are in place, the higher the likelihood of poor outcomes. Those poor outcomes are visible in pumped up equity prices, in housing markets over stimulated with nearly free money, in poor outcomes for savers and those on fixed incomes. Often the applied monetary cure can have serious deleterious spillover effects.

To be sure, maintaining greater room to manoeuvre, anticipating the next economic shocks, still requires central banks also to be clear they are ready to “do whatever it takes” as Mario Draghi did, to avert the Euro crisis. But central banks must also articulate their exit strategies. The economy must not become addicted to endless central bank intervention. An extended period of aggressive central bank interventions and unconventional measures to widen and deepen central bank actions in the economy should not become the norm.

Perhaps the inflationary spike, now gradually being subdued, in Britain and elsewhere, with much higher interest rates will help spur a return to more normal policies. I hope so. We would all benefit if central banking was boring again, as my former mentor the late Paul A Volcker, former chair of the US Federal Reserve System, who slayed America’s inflationary dragon of the 1970s and 1980s, preferred it to be.

We would be better off too if central bankers and the public took a more limited view of central banks’ tasks, abilities, and effectiveness. Being realistic may be disappointing or frustrating for those who still erroneously believe central bankers can help cure all ills, monetary, fiscal, or industrial. They cannot.

The sooner we all recognize and internalize this final lesson, and allow the Bank of England, the Federal Reserve, and ECB to focus on price and economic stability the better for all of us, and the shorter the period of inflationary pain we must endure.

Stuart PM Mackintosh is executive director of the Group of Thirty.