ECB Should 'Meaningfully' Revamp Inflation Goal Target Higher: Posen

The transcript discusses the ECP report's implications on passing grades and the ECB's approach to inflation targets. It highlights concerns about public perception of passing grades and the need for a symmetric inflation target. The conversation also explores the necessity of meaningful changes to inflation targets, suggesting that a higher target might better reflect economic priorities.

What is the main concern regarding the public's perception of the 1.7 passing grade?

• People might not care about the grade.

• People might think 1.7 is a failing grade.

• People might misunderstand the grading system.

• People might think 1.7 is a passing grade.

What does a symmetric inflation target imply for the ECB?

• The target should be strictly adhered to without deviation.

• The target should be flexible and change frequently.

• The target should always be above 2.

• Periods of low inflation should be balanced with periods of high inflation.

Why might a higher inflation target, such as 4, be considered?

• To signal a strong commitment to inflation control.

• To make it easier to achieve the target.

• To align with other central banks.

• To reduce the need for future adjustments.

What is the implication of setting a target of 2 but needing to average 3.5?

• It implies a need for honesty about the target.

• It shows a need for more frequent target changes.

• It suggests a lack of commitment to the target.

• It indicates a misunderstanding of inflation dynamics.

What is the suggested approach if the ECB wants to change its inflation target?

• Change it slightly to avoid market disruption.

• Change it meaningfully to show commitment.

• Change it frequently to adapt to economic conditions.

• Keep it the same to maintain stability.