Inflation targets must account for financial stability: former FSA head

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Howard Davies, the former chairman of the Financial Services Authority, has called for the Bank of England to adopt a flexible inflation target that allows policymakers to prioritise credit conditions over inflation.

Davies, who is now the director of the London School of Economics, told CentralBanking.com in an exclusive interview last Friday that, post crisis, any monetary policy target needed to be conditioned by analysis of financial stability and that there must be a link between the two.

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