The paper discusses the New Neoclassical Synthesis (NNS) in macroeconomics and its implications for monetary policy. The NNS combines Keynesian and classical ideas, emphasizing intertemporal optimization and rational expectations. It suggests that monetary policy can significantly affect real economic activity due to gradual price adjustments. The NNS also implies that inflation is primarily a monetary issue, and that credibility is crucial for effective monetary policy. The paper analyzes the role of monetary policy in various contexts, including the response to oil shocks, the choice of price index, and the design of monetary policy rules. It also explores the implications of the NNS for inflation targeting, emphasizing the importance of a simple and transparent rule. The paper reviews the evolution of macroeconomic thought, including the neoclassical synthesis, monetarism, and rational expectations, and discusses the implications of these theories for monetary policy. The paper also examines the role of real business cycles (RBC) and New Keynesian economics in shaping the NNS. The NNS suggests that monetary policy should focus on stabilizing the average markup of price over marginal cost, leading to a regime of inflation targets. The paper concludes that the NNS provides a coherent framework for understanding the role of monetary policy in the economy.The paper discusses the New Neoclassical Synthesis (NNS) in macroeconomics and its implications for monetary policy. The NNS combines Keynesian and classical ideas, emphasizing intertemporal optimization and rational expectations. It suggests that monetary policy can significantly affect real economic activity due to gradual price adjustments. The NNS also implies that inflation is primarily a monetary issue, and that credibility is crucial for effective monetary policy. The paper analyzes the role of monetary policy in various contexts, including the response to oil shocks, the choice of price index, and the design of monetary policy rules. It also explores the implications of the NNS for inflation targeting, emphasizing the importance of a simple and transparent rule. The paper reviews the evolution of macroeconomic thought, including the neoclassical synthesis, monetarism, and rational expectations, and discusses the implications of these theories for monetary policy. The paper also examines the role of real business cycles (RBC) and New Keynesian economics in shaping the NNS. The NNS suggests that monetary policy should focus on stabilizing the average markup of price over marginal cost, leading to a regime of inflation targets. The paper concludes that the NNS provides a coherent framework for understanding the role of monetary policy in the economy.