Think central1/5/2024 ![]() It should be noted that the prevailing mandates of both the ECB and the Federal Reserve contain reference to other objectives in addition to price stability. Support for the sole price stability objective is 9% in the US and 16% in the euro area. In the US, 60% of the respondents prefer ‘option a’. In the euro area, these two options obtain even support. Results for the entire global sample are broadly in line with the ‘weighted-average’ views of these two groups.Īs Figure 2 shows, in both regions roughly 80-90% of respondents prefer the central bank to have either (a) price stability and other objectives with equal weights or (b) price stability and subordinate objectives. In what follows we report the results separately for the euro area and the US. We also asked more generally about central bank objectives and observable policy targets. Many respondents support that central banks aim for more than just price stability ![]() In the euro area and in the US – where the central bank currently targets (approximately, in the case of euro area) a 2% inflation rate – the average preferred inflation target is slightly above 2% in both regions, with responses ranging from 0% to 5% in the euro area and 0% to 4% in the US. Figure 1 summarises these results.įigure 1 Preferred inflation target vs current target in countries with an inflation-targeting central bank 2 ![]() Similarly, the median respondent of those who want a lower inflation target prefers the target to be one percentage point lower than the central bank’s current target. The median respondent of those who want a higher inflation target prefers the target to be one percentage point higher than the central bank’s current target. 1 About two-thirds of the latter group (124 respondents) prefer a higher target while 64 respondents prefer a lower target. In this pool, 228 respondents support the central bank’s current inflation target, while 188 respondents prefer a different one. Throughout the survey, we gave respondents instructions to consider the central bank responsible for monetary policy in their own country of residence.Ī great majority (525 respondents) come from countries or regions with an inflation targeting central bank. We then asked whether the respondent prefers the central bank to have an inflation target and, if so, their preferred one. Because not all central banks have the same inflation target, we first asked the respondent to provide the current inflation target of the central bank in question (if it has one). We first examine whether respondents prefer an inflation target that may differ from what the central bank currently has in place. Most support is given to inflation targets similar to the status quo Their average academic experience in the sample is 24 years. Around 40% reported macroeconomics and monetary economics as their primary field of expertise. From a sample of approximately 6,000 individuals, we received 613 responses, of which 159 came from the euro area and 241 from the US.Ībout 80% of the respondents considered themselves as either experts or knowledgeable in issues related to monetary policy. The survey asked respondents for their views on the optimal inflation target and other related issues. We contribute to this debate by analysing the answers to an extensive global survey of leading researchers in economics and finance. The IGM Forum (IGM 2020) and the CFM survey (CFM 2020) have recently polled leading academics on these topics. Further, recent events (as well as long-term trends) have raised questions on what might be the right balance between price stability and central banks’ other objectives. But a higher target carries costs associated with more volatile (and higher) inflation on average. As near-zero policy rates hinder the effectiveness of monetary policy, one issue that has often come up is whether central banks should raise their current inflation targets to prevent the effective lower bound (ELB) from ‘binding’ in the future. The recent review of the Federal Reserve’s monetary policy strategy, and the ongoing review at the ECB, has reignited the debate about central banks’ optimal inflation targets as well as their wider objectives.
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