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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

Carney hints at scrapping inflation targets in aggressive push for growth

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.'

1 comment so far. Why not have your say?

Keith Cobby

Dec 12, 2012 at 10:57

Of course Mr Carney will scrap the inflation target and I expect that, following discussions with George Osborne, it is the reason he has been given the job.

How else other than default through QE and inflation and currency debasement will we be able to manage our indebtedness.

Since 'clipping the coinage' in medieval times it has been the favoured method by monarchs and governments to combat overspending.

Why earn it when you can print it!

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