Any relaxing of central banks’ mandates in this direction would be a serious mistake. Let me explain why. Certainly, it may be tempting for governments to suggest higher inflation in order to monetise the dramatic build-up of public debt.
However, calling on central banks to raise inflation rates permanently takes the focus away from the overriding problem, which is that, at present, unsustainable fiscal policies represent a threat to macroeconomic stability in nearly all advanced economies.