Ditch inflation targets? Better to overhaul them instead
In the absence of a better alternative, economies would fly blind because policy becomes untethered.
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Price stability, however defined, must remain the holy grail.
PHOTO: AFP
Daniel Moss
If a crucial goal of central banks is controlling inflation, then targets for the pace of price changes have been an indispensable ally. To rise to the task of helping economies with the challenges of the 21st century, their usefulness needs a rethink.
This isn’t simply a question of raising or lowering them, but whether they can be adapted to a very different world from the one in which they were born.
