Lower r* demands new ECB inflation target – economists


A lower natural rate of interest requires the European Central Bank to modify its inflation target, and possibly to adopt average inflation targeting instead, economists say.

When the ECB carried out its previous policy review in 2003 “one of the key assumptions was that the natural rate of interest hovered around 2%, and that’s not the case anymore. I think that in itself calls for a change”, said Jordi Galí, economics professor at Universitat Pompeu Fabra in Barcelona.

The main policy focus

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: