INSUBCONTINENT EXCLUSIVE:
By Rene Vollgraaff, Craig Torres and Tracy WithersStruggling to hit their targets for inflation, central banks around the world are debating
current strategies and whether they need to be changed to revive inflation as it keeps undershooting the levels deemed to represent price
best to achieve their mandate of maximum employment and stable prices
central bank feedback about how the economy is performing
opportunities for workers
In June, Chairman Jay Powell discussed the benefits and challenges of so-called make-up strategies in which inflation is temporarily pushed
above the 2 per cent target to compensate for past undershoots
US central bankers said they will report the results of the review in the first half of 2020.
European Central BankECB staff have begun
studying a potential revamp of their inflation goal, according to officials familiar with the matter
That would allow the ECB to keep inflation elevated for a while after a period of weakness to ensure price growth is entrenched
Changing the goal itself would probably require a formal review which is something Christine Lagarde may want to undertake when she takes
But economist Tony Yates says Britain is the most likely Group of Seven country to see its goal revised, especially if the opposition Labour
publish a forecast of the most likely path of interest rates that would be needed to keep inflation on target.
Central Bank of
HungaryHungary has been tinkering with its traditional 3 per cent inflation goal in recent years, partly to allow more leeway for policy
In 2015, the central bank said it would observe a tolerance band of 1 percentage point on either side of its 3 per cent inflation target
bank formally adopted a dual mandate of maximizing employment and achieving price stability in April
Since then the Reserve Bank has cut interest rates to a record-low 1.5 per cent amid signs both targets are under pressure as economic
Governor Adrian Orr has signaled that further rate reductions may be needed as inflation sits below his 2 per cent target, and hiring
Economists are almost unanimous that the RBNZ will cut the official cash rate to 1.25 per cent in August while a minority tip a further cut
to 1 per cent before the end of the year.
Central Bank of BrazilFormer central bank chief Arminio Fraga, who introduced inflation targeting
independence, currently being discussed in Congress
That would be in addition to its main goal of price stability, and not to be mistaken with a growth target, he stresses.
Central Bank of
ThailandThe Thai central bank said in a recent quarterly Monetary Policy Report that it held talks about reducing the 1 per cent to 4 per
cent target range, but decided against doing so this year, given concerns about economic growth and the need to build policy
space.
GhanaBank of Ghana Governor Ernest Addison surprised the market in January by cutting the key interest rate, and then also saying it
may be time to consider a lower inflation target to make the economy more competitive
In 2007 the central bank was the second in sub-Saharan Africa to adopt an inflation-targeting regime and has pursued price growth in a band
of 6 per cent to 10 per cent since 2013
Official talk of a lower target went quiet after inflation surged to a six-month high of 9.5 per cent in April due to a drop in the cedi
inflation anchored near the 4.5 per cent midpoint of its target band and not just below the 6 per cent upper end
inflation breaching the target than in the past, MPC member and Deputy Governor-designate Fundi Tshazibana said in February
This drive to keep inflation close to 4.5 per cent could set the central bank up for more clashes with politicians and some ruling-party
officials, who are pushing for an expanded mandate beyond just inflation.
Bank of CanadaThe Bank of Canada renewed its mandate with the
The Ottawa-based central bank strives to keep annual consumer price increases between a band of 1 per cent and 3 per cent
While that standard remained intact, three new indicators of core inflation were introduced at the time
