King says price stability insufficient for economic stability

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Mervyn King, the governor of the Bank of England, insisted inflation targeting has a future in monetary policy, but accepted there may be times when it must be sacrificed to mitigate the risk of financial crises.

King, speaking at the London School of Economics on October 9, said the current crisis has demonstrated "vividly" that price stability is not sufficient for wider economic stability.

When considering long-run stability, King said the New Keynesian framework omits key factors. In particu

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