"The recent financial crisis and subsequent deterioration in macroeconomic outcomes have raised question marks over the framework for monetary policy in the United Kingdom. This paper examines the performance of the UK's monetary policy framework in the light of these questions. Far from concluding that inflation targeting needs to be replaced, we argue in the paper that the regime has provided a clear policy compass that facilitated strong and decisive monetary policy decisions during the financial crisis. We argue that it should remain the mainstay of the UK macroeconomic policy framework. Even so, lessons need to be learnt to prevent financial market excesses from destabilizing the economy in future: the single most important being the need to expand the range of instruments available to policy-makers. "

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