ND: How U.S., U.K. Central Banks Are Responding To Inflation
Most central banks have an inflation targeting mandate. That means they are usually charged with setting policy to maintain a level of inflation. Central banks are working to keep a lid on prices and also to maintain a price level floor. Typically that target is somewhere around 2% in the medium term. In addition to an inflation target, the U.S. Federal Reserve is charged with maintaining full employment.
Today saw U.K. Consumer Price Inflation dead flat 0.0% year on year, far short of its 2.00% target. This means that the Bank of England is going to have to do more to promote economic growth in the medium term to boost prices and to defer efforts to "normalize" monetary policy until late in the year at the earliest. The British Pound (GBP) eased on this news.
