TOKYO : Former Bank of Japan (BOJ) Governor Masaaki Shirakawa called on policymakers to reconsider central banks' monetary framework based on inflation targets, given their limits that became apparent from the recent spike in prices seen in many countries. Before the recent spike in inflation, many centra
TOKYO : Former Bank of Japan Governor Masaaki Shirakawa called on policymakers to reconsider central banks' monetary framework based on inflation targets, given their limits that became apparent from the recent spike in prices seen in many countries.
"Inflation targeting itself was an innovation that came about in response to the severe stagflation of the 1970s and early 1980s. There is no reason to believe it is set in stone," Shirakawa said. "When the economy is hit by a surprise shock to demand or supply, forward guidance of continuing low interest rates can suddenly become too expansionary and inflationary. This may partly explain what we are seeing now," he said.
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