Should central banks’ inflation targets be raised?
The last in our series on the central-bank pivot
![](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/media-assets/image/20220723_FND000.jpg)
When new zealand’s parliament decided in December 1989 on a 2% inflation target for the country’s central bank, none of the lawmakers dissented, perhaps because they were keen to head home for the Christmas break. Rather than being the outcome of intense economic debate, the figure—which was the first formal target to be adopted by a central bank—owes its origin to an offhand remark by a former finance minister, who suggested that the soon-to-be-independent central bank should aim for either zero or 1% inflation. The central-bank chief and incumbent finance minister used that as a starting-point, before plumping for 0-2%. Over time, 2% became the standard across the rich world.
This article appeared in the Finance & economics section of the print edition under the headline “Aiming high”
Finance & economics July 23rd 2022
- The 53 fragile emerging economies
- How American banks are responding to rising interest rates
- Dollar-euro parity may be justified. But the yen looks cheap as chips
- Is China facing an energy crunch, too?
- Fresh woe for China’s property sector: mortgage boycotts
- The Fed put morphs into a Fed call
- Should central banks’ inflation targets be raised?
More from Finance & economics
![](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20240914_FNP501.jpg)
Can anything spark Europe’s economy back to life?
Mario Draghi, the continent’s unofficial chief technocrat, has a plan
![](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20240907_FND003.jpg)
Has social media broken the stockmarket?
That is the contention of Cliff Asness, one of the great quant investors
![](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20240907_FNP504.jpg)
American office delinquencies are shooting up
How worried should investors be?
China is suffering from a crisis of confidence
Can anything perk up its economy?
America has a huge deficit. Which candidate would make it worse?
Enough policies have been proposed to make a call
Why Oasis fans should welcome price-gouging
There are worse things in life than paying a fair price