When 2% is not enough
The rich world’s central banks need a new target
LIKE other areas of public policy, central banking is prone to fads and fashions. From limits on money-supply growth to pegging exchange rates, orthodoxies wax and wane. Yet the practice of inflation-targeting has proved remarkably long-lived. For almost three decades, central bankers have agreed that their best route to stabilising an economy is to aim for a specific target for inflation, usually 2% in advanced economies and a little higher in emerging ones.
This article appeared in the Leaders section of the print edition under the headline “When 2% is not enough”
From the August 27th 2016 edition
Discover stories from this section and more in the list of contents
Explore the editionDiscover more
Lessons from the failure of Northvolt
Governments blew billions on a battery champion. Time to welcome foreign investors instead
How to make a success of peace talks with Vladimir Putin
The key is robust security guarantees for Ukrainians
Javier Milei: “My contempt for the state is infinite”
Argentina’s president is idolised by the Trumpian right. They should get to know him better
Tariff threats will do harm, even if Donald Trump does not impose them
The risk of a trade war is uncomfortably high
Peace in Lebanon is just a start
Donald Trump must build on Joe Biden’s belated success
From Nixon to China, to Trump to Tehran
Iran is weak. For America’s next president that creates an opportunity