FRANKFURT (Reuters) – Britain could have benefited from a higher inflation target than the 2% level first set in 2003, though any change now would carry costs, Bank of England policymaker Silvana Tenreyro said on Tuesday.
Long-term market interest rates have fallen globally since the 2008-09 financial crisis and are now close to zero in many advanced economies, giving central banks little scope to cut short-term rates to boost the economy in a future downturn.
Officials - Mix - Asset - Purchases - Bank
Instead, officials have turned to a mix of asset purchases and negative bank deposit rates in a bid to boost demand – policies whose effectiveness and side-effects are disputed in the countries where they have been implemented.
Tenreyro, an external member of the BoE’s Monetary Policy Committee, said at a European Central Bank conference that Britain’s inflation target reflected a pre-crisis world of much higher average interest rates.
Equilibrium - Rate - Interest
“If we were starting over, a lower equilibrium rate of interest might...
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