A crucial responsibility of any central bank is to control inflation, the average rate of increase in the prices of a broad group of goods and services.
Sentiment: NEGATIVE
I have never believed that central banks should have rigid inflation targeting. That is not a good thing to stabilize. There is nothing in economic theory to back this.
Efforts to promote financial stability through adjustments in interest rates would increase the volatility of inflation and employment. As a result, I believe a macro-prudential approach to supervision and regulation needs to play the primary role.
By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
The Fed's ability to raise and lower short-term interest rates is its primary control over the economy.
Since World War II, inflation - the apparently inexorable rise in the prices of goods and services - has been the bane of central bankers.
After a long period in which the desired direction for inflation was always downward, the industrialized world's central banks must today try to avoid major changes in the inflation rate in either direction.
Of course, looking tough on inflation is part of any central banker's job description: if investors believe that inflation is going to get out of control, you end up with higher interest rates and capital flight, and a vicious circle quickly ensues.
I'm just opposed to a pure inflation-only mandate in which the only thing a central bank cares about is inflation and not employment.
I will say this: the central banks can actually support growth beyond a point. When there is no inflation, they can cut interest rates, and that is the way they support growth, but if you cut interest rate to the bone, there is nothing more to cut. It is very hard to support growth beyond that.
You can't have a regime which continuously subsidizes things; as inflation rises, you keep prices of certain things unchanged.
No opposing quotes found.