Published on To •
18 min read
Economists are increasingly debating the value of the 2% inflation target in major western economies. Major central banks have hiked interest rates over the past year, but inflation remains stubbornly above their respective 2% targets. But how do they agree on this goal?
Why is that important?
The European Central Bank, the US Federal Reserve, the Bank of Japan, the Swedish Riksbank, the Bank of Canada, the Bank of England… They all have an inflation target of 2%. However, the question is whether this 1988 target is still appropriate in a completely changed economy.In the news : “We should not dismiss an institution like the 2 percent target lightly,” writes economist Adam Tooze in the FinancialTimes. “But like any quasi-constitutional rule, it must be subject to public scrutiny and evaluated in the light of the current situation. The 2% target was realistic at a time of ‘great moderation’. The question is: is it still appropriate?” at the age of
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