Raising inflation targets to 3% or 4% would help prevent countries slipping into a "low-inflation trap", according to Paul Krugman, who sought to reopen the debate with a "provocative" presentation at today's European Central Bank (ECB) forum on central banking.

Krugman, a professor at Princeton University, told an audience of central bankers in Sintra, Portugal, that a higher inflation target was "more desirable now than it was a decade or two ago".

He argued that if central banks continued