The Chancellor of the Exchequer wonders aloud about the worst economic crisis for 60 years. The Organisation for Economic Co-operation and Development predicts recession for the UK. House prices are falling at their fastest rate for 25 years. Unemployment is up. Consumer confidence is at a record low. But yesterday the Bank of England left interest rates unchanged, for the fifth successive month.

The reason for that decision is inflation. The Bank's Monetary Policy Committee (MPC) must meet an inflation target. The target is 2 per cent; the annual rate of inflation is 4.4 per cent. The MPC hopes that inflation will be brought under control this year by a slowdown in the economy. But it does not feel able to cut rates now, for fear of aggravating inflationary pressures.

Is this any way to run an economy? In another age, chancellors would cut interest rates to try to stimulate growth and employment. The economy is being buffeted by imported inflationary pressures - in energy and food prices - that the Bank can do little about. Compare and contrast with the central bank of the United States: the Federal Reserve has by law a “dual mandate” to promote equally price stability and maximum employment.

There are strengthening calls for Gordon Brown's Government to consign inflation targeting to the historical junk yard of temporarily fashionable but superseded economic nostrums. At a minimum, there is a superficially attractive argument for amending the current system - possibly choosing an inflation measure that excludes food and energy; or allowing the MPC more discretion in the timescale within which it must meet the inflation target; or simply mandating a less onerous inflation target, say 3 per cent.

All or any of these remedies would be mistaken. There is certainly scope for debate over the monetary framework. Economic management is not an exact science. (As Alistair Darling has rueful reason to reflect, it is also a performing art.) But the right time for that debate will be when the economy is recovering, not when the going has got rough and the Government has pressing reasons of political survival to alter the rules.

Economic policy is about trading off costs against benefits. Effective policy broke down in the 1970s as governments sought short-term benefits regardless of the long-term trouble - usually in the form of higher inflation - that they were storing up. The Conservatives in the 1980s and early 1990s tried to reverse that culture. They instituted necessary reforms. But the rules they followed proved too rigid. Inflation targeting was adopted in 1992 amid the ruins of a policy of targeting the exchange rate through the European Exchange Rate Mechanism.

Inflation targeting is a compromise between a mechanical rule and unconstrained discretion. The MPC is dedicated to meeting a single target, rather than balancing several competing ones; but it has discretion in how to meet the target. The approach has worked well, in this country and elsewhere. One lesson that policymakers took from the turmoil of the 1970s was that employment and growth depended on financial and price stability. Targeting inflation, while giving the central bank operational independence to achieve that target, lessens the risk that governments might manipulate the economy for political reasons.

If there is one element of new Labour's economic management that distinguishes it from the past, it is in insulating crucial economic decisions from electoral politics. The monetary framework that it inherited and expanded in 1997 is one of the few remaining features of the Government's economic credibility. It must be maintained and defended.