Has the Bank of England abandoned inflation targeting?

An interesting comment was made recently by Andrew Lilico at a meeting of the IEA’s Shadow Monetary Policy Committee. He suggested that the Bank of England has given up inflation targeting. This is interesting, of course, given Mervyn King’s speech yesterday arguing that deviating from inflation targeting would be very dangerous. Andrew Lilico’s point was that, instead of targeting inflation, the Bank of England is targeting its inflation forecast. In other words, it has moved to an ‘inflation forecast targeting’ regime whereby it always ensures that monetary policy is set so that its models predict the right level of inflation two years out – and is impervious to any reasoning about the inadequacy of the models.

Read the full blog post here

Source: http://www.iea.org.uk/blog/has-the-bank-of-england-abandoned-inflation-targeting

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