Monetary Policy: Old Lessons and New Challenges

The relatively long term period of stability before the present crises called even "Great Moderation" or "Golden Age of Central Banking" indicated that the infl ation targeting was a success story. As of 2008 a lot has changed and the debate over "Leaning against the wind or Clean afterwards?" is being revisited among central bankers and academicians. At the same time the question "Does money matter in monetary policy" is on the table again. This paper focuses on the discussion of these issues; moreover, some new challenges that emerged in previous three years are discussed. The crisis has highlighted an urgent need to incorporate banks and financial frictions into monetary policy modelling framework - therefore some new findings on this field of research are outlined. An important lesson from the crises is that price stability is not a sufficient precondition for financial stability, therefore an operational framework for financial stability is being searched - this is subject of the final part of this paper.