For the past thirty years the orthodoxy has been that central banks should focus on controlling inflation, targeting a rate (normally 2%) over a key policy horizon (often 18 months to two years ahead). In his address to the annual Jackson Hole monetary policy symposium, US Federal Reserve Chair Jerome Powell signalled a break with that orthodoxy by announcing that the Fed would now adopt “a flexible form of average inflation targeting”.

Read the publication Average inflation targets from a global perspective on the Capital Economics Website.

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