Central banks' focus on maintaining low inflation neglects the more worrying prospect of spiralling deflation, and having higher targets would have helped in the crisis, Olivier Blanchard, the chief economist of the International Monetary Fund (IMF), said on Friday.

Blanchard, in a paper co-authored with economists Giovanni Dell'Ariccia and Paolo Mauro, argued that the low levels of inflation preceding the crisis, along with zero nominal interest rate bound, prevented central banks from cutting