1 Indian Institute of Foreign Trade, Kolkata Campus, Kolkata, West Bengal, India
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This article reviews the central tenants of the New Neoclassical Synthesis of monetary policy. Starting with the optimising behaviour of central banks, this article reviews different theoretical developments like the role of expectations, the Taylor Principle, time-inconsistency, central bank independence and the importance of financial markets for monetary policy. The article concludes by highlighting the challenges faced by policymakers.
Monetary policy, new neoclassical synthesis, inflation, output, expectations
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