Perhaps 2% is too low; making deflation more likely when the target is missed on the downside.
The fund added that inflation was worryingly low and deflation a real risk, prompting a raft of policies from the ECB to avoid the region tipping into it.
More generally, inflation is low and deflation in the euro zone seems not too far away.Special circumstances may explain some of this.
In particular, he argued that it could make private-sector borrowing more attractive by announcing that it would keep interest rates low until deflation had given way to 3 percent or 4 percent inflation — an idea originally suggested by yours truly.
Maybe when interest rates are low during deflation (Japan now), people will tend to hold more money, whether they feel bad or good.
And the pension gap will widen if, as I forecast, we enter an era of mild deflation, low interest rates and depressed equity returns.
The United States is also at risk, he said, though he rated the chances of deflation low.
Some believe this move has been driven by expectations of low inflation (or deflation) in coming years.
In a situation of low demand and deflation, he said, "before too long, enough political pressure would build up for a big fiscal expansion".
Japan has had the longest experience with low inflation and deflation, and on Tuesday the Bank of Japan introduced negative interest rates.
