Is the entire world of central banks (but the European Central Bank) going off the rails – or are they deliberately moving in the direction of market monetarism: central banks that use other instruments than the interest rate to support demand and economic recovery by targeting the nominal gross domestic product?
In the past years, the Federal Reserve and the Bank of England, among others, have moved into new territory as old regimes have proven inadequate. The Bank of Japan has now in a similar direction with a policy to raise money supply to fight deflation. Should the ECB also take similar actions? The crisis has prompted many to revisit the inflation targeting regime previously heralded by central banks. The ECB is focused at a stable rate of inflation around 2 percent, but Eurozone inflation is now significantly below that target. And the risk of sustained deflationary pressures adds further burden to those countries that are in the process of fiscal consolidation and current account rebalancing. Is it time to change the ECB’s inflation target?
You are cordially invited to a seminar with Lars Christensen, Chief Analyst at Danske Bank and one of the leading proponents of market monetarism; Matthew Dalton, a correspondent for Wall Street Journal; and Philippe Legrain, adviser to Commission President Barroso and Head of Analysis at the Bureau of European Policy Advisers.
A lunch sandwich be served during the event