Europe faces tough 2% inflation target
A new report from the European Monetary Institute (EMI), the forerunner of the European Central Bank says: "It will be useful for the European System of Central Banks to announce a definition of price stability ... there has been a broad consensus among central banks ... that a range of zero to 2 per cent inflation per annum would be appropriate." The Maastricht Treaty specifies that the primary objective of the European Central Bank must be "to maintain price stability".
The report, The Single Monetary Policy in Stage Three, was put together by the EMI in conjunction with European central banks, including the Bank of England. It says: "No unconditional recommendation can be given at this stage for the strategy of the ESCB." However, the report does say that monetary policy should involve either monetary targeting or inflation targeting or some combination of the two. The Bundesbank currently targets the money supply. However, this might be difficult in the first few years of EMU while the relationship between measures of euro money supply and inflation remains unstable.
The EMI states: "The ECB should publicly set targets against which its performance can be assessed."
Given the "consensus" among European Central Bankers that price stability means inflation of zero to 2 per cent, this suggests that if the ECB chooses an inflation target it is likely to be 2 per cent or less. But the crucial question remains which measure of inflation would be set against the target.
- 1 Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
- 2 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 3 Halle Berry takes ex-boyfriend Gabriel Aubry to court for allegedly trying to make daughter look less African-American
- 4 Isis propaganda image showing 'abuse of Muslim woman by soldiers' is actually taken from Hungarian porn film
- 5 'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
Turkish President: 'Equality between men and women is against nature'
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
Ferguson decision: Tea Party website mocks Michael Brown's family over T-shirt typo
Michael Brown shooting: Ten things we know – or know better – now the Ferguson grand jury's work is over
Isis propaganda image showing 'abuse of Muslim woman by soldiers' is actually taken from Hungarian porn film
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Revealed: How the world gets rich – from privatising British public services
iJobs Money & Business
£Attractive: Citifocus Ltd: High calibre individual with significant product d...
£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...
£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...
£Attractive: Citifocus Ltd: High calibre individual with superior academics an...