Flexible targeting still best practice: Riksbank’s Svensson
Flexible inflation targeting needs not be abandoned in the wake of the financial crisis, argued Lars Svensson, the deputy governor of the Riksbank. He said that a deeper understanding was needed of the role of financial factors in central banks' monetary-policy transmission mechanism.
Svensson theorised that financial stability was only one aspect of the transmission mechanism and that, as a result, the health of credit growth or asset prices were not intrinsically important to central banks
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