RBA paper warns on inflation targets

A research paper published by the Reserve Bank of Australia on Thursday 2 June has warned that central banks should not set their inflation targets too low.

This would reduce the risk of encountering the "zero lower bound" (ZLB) - the inability to cut interest rates to less than zero - when a central bank is trying to burst asset price bubbles and keep an economy from falling into recession.

Co-authors of the research Tim Robinson and Andrew Stone said the Bank of Japan had run into the ZLB since

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