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 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 4 Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
- 5 Phil Neville backtracks on Tomas Rosicky 'I'd smash him' comments from Match of the Day 2
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Pornhub star Mia Khalifa receives death threats after being ranked the site's top adult actress
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
Leaked documents show Ukip leaders approve NHS privatisation once it becomes more 'acceptable to the electorate'
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...