2013 Chapters (Layout Features)

Inflation Targeting: Fix It, Don't Scrap It

Woodford, Michael

Should inflation targeting go? This column claims that the key arguments for inflation targets retain their force. The dramatic, Crisis-linked actions raise doubts about central banks’ longer-run intentions and credibility, and strengthen the case for keeping the trusted framework. Abandoning it to start from scratch would amplify rather than mitigate such doubts. Fine-tuning inflation targeting is the answer.