Our current level of inflation and our target are not close to the low inflation trap, and our view is that a higher inflation target would merely raise inflation expectations, and actual inflation would then likely increase.
The end result would be higher nominal interest rates, and because of possible higher inflation variability and other risk premia, we could end up with higher real interest rates as well. In conclusion, inflation targeting is not as straight-forward as its name suggests. There are many contentious issues, and the challenges facing emerging market economies are different to those of the advanced economies.