Asset Allocator's Soapbox: SLI's Douglas Roberts

By that he meant that policy should be so predictable and transparent that any policy changes should come as no surprise to market participants. The key to this brave new boring world of monetary policy was the adoption of inflation targeting. When the Bank was granted independence it was set a target level for consumer price inflation. Interest rates would then be set so that the target level was achieved within a reasonable time period (in practice 2 years). As a result, it was hoped that such a clear remit, and policy prescription, would anchor expectations, and corral wage and price ...