To the extent that a higher target is closer to the threshold, this makes it more likely the country will exceed the threshold and experience lower growth. Third, inflation could feed on itself at higher levels – the higher the target, the more chances of entering regions where inflation spirals upwards.
2  BIS Review 61/2007  In order to reduce inflation, the Central Bank allowed the increase of the nominal effective ruble rate: from December 2004 to December 2005, by 3,2%, and from December 2005 to December 2006 – by 2,2%. The real effective ruble exchange rate grew 10.5% in 2005, and another 7.4% in 2006.