All the major global central banks have an unhealthy fixation on the narrowest of data points. They all set policy according to the lodestar of inflation being at 2% in the medium term. That has always been bizarre since the world doesn’t work to such order. They can’t calculate it properly anyway — as the current rampant inflation spike shows.
So it’s time for these rigid targets to be scrapped and for more flexibility to be breathed into monetary frameworks. Urgently. Otherwise we will be fighting the last war with outdated weaponry. The Fed flirted with a more realistic approach under its short-lived Flexible Average Inflation Targeting but dropped it like a stone on the first signs of (serious inflation) grapeshot last year.
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