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?

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

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

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

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