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Carney hints at scrapping inflation targets in aggressive push for growth
by Sarah Miloudi on Dec 12, 2012 at 08:50
Incoming Bank of England governor Mark Carney has hinted at scrapping inflation targeting.
In a speech set to re-write the central banking rule book, Carney (pictured) broached the idea of taking more aggressive action to boost ailing economies.
He will take over from Mervyn King next year, who in June steps down as the Bank of England governor.
'To achieve a better path for the economy over time, a central bank may need to commit credibly to maintaining highly accommodative policy even after the economy and, potentially, if inflation picks up,' Carney said, in an address to the CFA Institute in Toronto.
'To "tie its hands" a central bank could publicly announce precise numerical thresholds for inflation and unemployment that must be met before reducing stimulus. If yet further stimulus was required, the policy framework itself would likely have to be changed.
Carney added: 'For example adopting a nominal GDP level target could in many respects be more powerful than employing thresholds under flexible inflation targeting.'
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