Central banks can be ‘too cautious’ with policy, BdF paper says

inflation

Central banks can be too cautious when responding to inflation shocks, according to researchers with the Bank of France.

In A Pitfall of Cautiousness in Monetary Policy, Stéphane Dupraz, Sophie Guilloux-Nefussi and Adrian Penalver say caution has characterised many recent central bankers’ approaches. They cite statements from US Federal Reserve chair Jerome Powell and former European Central Bank president Mario Draghi recommending a gradualist approach to tackling inflation.

But such an approach

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