These costs could include financial market distortions, difficulties in unwinding large holdings of securities, and in the extreme, potential compromises to the political independence and credibility of the central bank. With these risks now better appreciated, some have suggested that central banks ought to target an inflation rate higher than 2 per cent. There are essentially two arguments.
Relative to other economic measures, the side effects of monetary policy are difficult to grasp until they actually materialize. Therefore, I believe that the Bank should thoroughly explain the side effects of QQE widely to the public and show that it conducts policy paying full attention to these effects.