Twenty years of inflation targeting - speech by Mervyn King

Mervyn King – Governor of the Bank of England – gives a personal assessment of the inflation targeting regime over the past twenty years.
Published on 09 October 2012

The Governor’s Stamp Memorial Lecture, at the London School of Economics, marks the twentieth anniversary of the introduction of inflation targeting. He characterises the period as “fifteen years of stability and five years of turbulence – the Great Stability and the Great Recession”. He notes that over the past twenty years, price inflation in the United Kingdom averaged 2.1% - well below inflation in the preceding decades. But he asks “did we pay too high a price for this achievement?” noting that “the past five years of financial crisis and turmoil in the world economy have raised serious questions about the adequacy of inflation targeting”. So the main theme of his lecture is to ask “should monetary policy go beyond targeting price stability and also target financial stability?”

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