Lessons for Inflation targeting cenral banks from this crisis

Lars Svensson has a useful speech on lessons from this crisis for inflation targeting central banks. He points that zero interest rate bound is a mystique and central banks can easily go negative. He is actually walking the talk as Riksbank went  negative in this crisis. One should also read his views in the Minutes of MPC meeting held in September.

He also says one should not mix central banks for price stability with central banks for financial stability. We need supervision to look at financial stability. Also, we need finance to have a bigger role in macro models.

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