Here’s Why Lowering Russia’s Inflation Target Is Madness

(Bloomberg) --

Russian inflation is on another extended slide below the central bank’s 4% goal, yet changing that target -- as some have suggested -- would be harmful, according Bloomberg Economics. The target is still new, and it’s too soon to declare that inflation expectations have anchored to it. Price gains may be low now, but much of that reflects temporary influences, and shifting the target because it looks tough to achieve would undermine faith in the central bank. Finally, a lower target, if successful, provides less room to cut rates in a downturn.

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