Should Central Bankers Follow The Two-Century Inflation Target?
(2 min read)
This year, headline inflation has averaged 1.7% in the US, 1.4% in the Euro-area, and 0.5% in Japan. Therefore, years after the financial crisis and despite, in many cases, low levels of unemployment, inflation is struggling to move to 2% – the magical target aimed at by central bankers. But struggle though they may, these bankers continue to strive. Most central banks have now signalled cuts are to come, yet what if the ‘true’ level of inflation of these economies is much lower – say 0.5% or 1%? This would mean that central banks are overstimulating the economies, which could well have weighty consequences...
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