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Now it seems that strict inflation targeting may not be a panacea either.
Many economists say that this is confusing and urge the bank to dump money and adopt a strict inflation target.
In other words, strict inflation targeting the fad of the 1990s is too crude.Oceans apartIn the past, asset prices were less of an issue.
However, the Fed is considering the idea just when some other central banks are beginning to question whether strict inflation targeting really works.At present central banks focus almost exclusively on consumer-price indices.
The problem with setting interest rates in this way adjusting the inflation target for asset-price misalignments is that it is harder to explain to the markets and the public than a strict inflation target.Central banks would have to explain carefully why they are temporarily missing their inflation targets.
Other brave talk of reforming subsidies and a big rural-jobs scheme came unburdened by detail.In this section The quick count and the long Stuffed Double games Going for growth Scrum-halves Capital crimes ReprintsOn the other hand, Mr Jaitley's remarks on rethinking the central bank's monetary strategy, taken by commentators to mean setting a strict inflation target, are to be welcomed.
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"Why do you not act more directly to help European countries by buying up the debt on a massive scale?" Mr. Draghi said he was bound by the European treaty, which "embodies the best tradition of the Deutsche Bundesbank," the German central bank, code for strict inflation-fighting and the furthest thing from a wholesale emergency bailout.
This may offer the RBI some comfort in its battle against inflation, but the bank's new, stricter inflation target (4.5-5% in 2007/08, down from 5-5.5 5-5.5%06/07) suggests that there winl be one more increase in interest rates by the end of 2006/07 the other hand, for both economic and political reasuggestslicymakers cannothatford therenore the problems of exporters.
The main result of this paper is that strict headline inflation targeting could be outperformed by sectoral inflation targeting, output gap stabilization, or a combination of these.
Mr. Barak's nomination of Mr. Klein for the bank governorship signaled a continuing commitment to strict anti-inflation policies at a time when inflation here has fallen to its lowest level in a generation.
The Germans accepted monetary union in the 1990s on condition that the euro would be as strong as the mark, with low inflation, strict budget discipline and no bailout for the weak.
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