Weidmann does not see case for higher inflation targets
The welfare costs associated with a higher inflation target outweigh any potential benefits from reducing the probability of hitting the zero lower bound (ZLB), Deutsche Bundesbank president Jens Weidmann argued today (July 9).
Addressing an audience at a Bundesbank conference on the impact of crises on the nature of central banking, Weidmann noted macroeconomic models tend to "advise against" inflation targets of more than 2% – even when taking the ZLB into account.
"What is the underlying
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