Central Banks 'Set Up to Fail' on Inflation: Davies

The transcript discusses the debate over inflation targets, questioning the relevance of the 2% target in today's economic climate. It highlights the challenges of reducing inflation to 4%, considering interest rate hikes and energy price fluctuations. Concerns are raised about the central banks' ability to achieve these targets without political support, risking their independence. A suggestion is made to temporarily allow a higher inflation target during the adjustment phase.

What does the speaker suggest might be necessary to achieve a return to a 2% inflation target?

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What is the concern regarding the current inflation rate and the target of 2%?

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How does the speaker view the role of central banks in relation to inflation?

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What are the potential consequences of the central banks failing to manage inflation effectively?

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What alternative approach does the speaker propose regarding inflation targets during the adjustment phase?

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