Central banks have a problem: economic growth is accelerating, but inflation has failed to take off. But perhaps the solution is not to continue trying to raise inflation – for most people, growth without inflation is ideal – but rather for central banks to end their preoccupation with inflation targeting.
BRUSSELS – Central banks have a problem: growth in much of the world is accelerating, but inflation has failed to take off. Of course, for most people, growth without inflation is the ideal combination. But central banks have set the goal of achieving an inflation rate of “below, but close to 2%,” as the European Central Bank puts it. And, at this point, it is hard to see how that can be achieved.
BRUSSELS – Central banks have a problem: growth in much of the world is accelerating, but inflation has failed to take off. Of course, for most people, growth without inflation is the ideal combination. But central banks have set the goal of achieving an inflation rate of “below, but close to 2%,” as the European Central Bank puts it. And, at this point, it is hard to see how that can be achieved.