Many Central Banks (CBs) were only granted independence in 1990s, not long after the economic turbulence of the 70s and 80s.
The timing of independence and inflation targeting occurred just as three new disinflationary forces struck global economies.
Increases in cheaper imports, technological developments and changes in human capital all brought disinflation to developed economies.
Over many years CBs underestimated and mistakenly worried about this type of disinflation
The global pandemic blocked world trade and brought significant declines in human capital productivity.
The three disinflationary forces are now back in play – recent data has surprised to the downside.
Two further new disinflationary forces should now be expected, one from rising unemployment, the other from the already decelerating credit growth, both natural consequences of tighter monetary policy
CBs seem to continue to underestimate disinflationary forces, just as they underestimated higher inflation when the forces were blocked due to the pandemic.
As witnessed repeatedly in the past, expect CBs to be further surprised by disinflation, which will eventually bring deeper interest rate cuts (than perhaps necessary).