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Is it time for central banks to start targeting GDP growth?

Central banks have long stuck to the 2 per cent inflation target but now the conventional wisdom is being questioned

By David Wessel  

The Bank of England. Photo: Stefan Rousseau/PA Wire/PA Images

About a quarter century ago, central bankers around the world coalesced around a monetary policy strategy that was elegant in its simplicity. Although details vary, the world’s major central banks said they would aim to move interest rates to keep inflation at around 2 per cent. The theory was that setting such a target would promote economic stability and anchor public inflation expectations so that the central banks could, when necessary, tolerate a little more or a little less…

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