Those Inflation Targets Keep Getting Harder to Hit

Central bankers are failing to meet their own standards for inflation. With growth and trade down in much of the world, inflation is lower than they want it to be across the biggest economies: the U.S., Europe, Japan, and China.

Yet when central bankers met for the Jackson Hole Economic Policy Symposium in Wyoming in late August, the talk was about how inflation was really, truly, finally about to rise—in spite of the economic and market turmoil that was going on at lesser altitudes. “There is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further,” Fed Vice Chairman Stanley Fischer said in his prepared remarks. Bank of England Governor Mark Carney’s prepared remarks cited “the prospect of sustained momentum” in the economy and a gradual pickup in inflationary pressures. And European Central Bank Vice President Vítor Constâncio said that as long as Europe can succeed in gunning growth, “we can rely on a material effect to help bring the inflation rate closer to target.” Speaking in New York City on Aug. 28, Bank of Japan Governor Haruhiko Kuroda insisted that Japan could hit its 2 percent inflation target next year, even though the latest reading for its preferred measure of inflation was precisely zero.