Insight - Has Covid finally killed inflation targetting?

High prices: A grocery store in New York. Financial markets doubt central banks will succeed in returning United States inflation to 2% targets any time soon. — AFP

THE seismic supply shocks and wild price distortions of the pandemic could finally call time on 30 years of strict inflation targeting by the world’s big central banks.

Faced with headline and core inflation rates surging far above 2% target rates and at their highest in decades, central banks have scrambled to lift interest rates from historic lows or flag rate hikes ahead – even though they insist inflation will be close to or even below those targets within two years.