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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.

You can't have a regime which continuously subsidizes things; as inflation rises, you keep prices of certain things unchanged.

We know that inflation distorts economic behavior. In the 1970s, a combination of high tax rates and inflation prompted investors to flee production in favor of protection.

Foreign trade clearly has been a reason why inflation has been low.

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 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.

The real problem is deflation. That is the opposite of inflation but equally serious to the borrower.

When people begin anticipating inflation, it doesn't do you any good anymore, because any benefit of inflation comes from the fact that you do better than you thought you were going to do.