New York Fed paper wary of higher inflation targets
A staff report published today by the Federal Reserve Bank of New York warns that if central banks were to increase their inflation targets to more than 2% they would risk destabilising the real economy.
In The Macroeconomics of Trend Inflation, Guido Ascari and Argia Sbordone acknowledge that most central banks aim to keep inflation at around 2%, but that the recent crisis has led some to propose higher inflation targets to provide policy-makers with more space to react to deflationary shocks.
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