dr3642c.jpg Dean Rohrer
en English

The Death of Inflation Targeting

Inflation targeting by central banks, a hugely popular monetary-policy anchor around the world, died in September 2008, when it became clear that those who had been relying on it had not paid enough attention to asset-price bubbles. But its death was never announced, owing to uncertainty over what should succeed it.

CAMBRIDGE – It is with regret that we announce the death of inflation targeting. The monetary-policy regime, known as IT to friends, evidently passed away in September 2008. The lack of an official announcement until now attests to the esteem in which it was held, its usefulness as an ornament of credibility for central banks, and fears that there might be no good candidates to succeed it as the preferred anchor for monetary policy.

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