Benyamin Appelbaum has a survey in “2% Inflation Rate Target Is Questioned as Fed Policy Panel Prepares to Meet”:
The cardinal rule of central banking, in the United States and in most other industrial nations, is that annual inflation should run around 2 percent.
But as the Federal Reserve prepares to start raising its benchmark interest rate later this year to keep future inflation from exceeding that pace, it is facing persistent questions about the wisdom of the rule and the possible benefits of significantly increasing its target.
Higher inflation could disrupt economic activity, but it also would enhance the Fed’s power to stimulate the economy during recessions. And some experts say the struggles of the Fed and other central banks to provide enough stimulus since the Great Recession suggest they could use more room for maneuvering.
“Most developed countries’ central banks have experienced difficulty in providing sufficient monetary stimulus to spur a robust recovery in their economies,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in a recent speech in London. “This may imply that inflation targets have been set too low.”
IT has been “dead” for seven years but a “burial ceremony” is never planned! Instead, applying “CPR” is the “solution” most discussed.
When “theory” placed inflation targeting at the “center” and interest rate targeting as the “mechanism” to accomplish it, they simultaneously took money out of the equation.
Give IT the R.I.P. it deserves, and bring out “nominal stability” to centerfold. Money will naturally become the “accomplishing mechanism”.