If we are pessimistic we risk panicking the markets and setting off self-fulfilling cycles. So we have to go by what the data are telling us. And the data show a clear stabilisation in the global economy since last year. The U.S. is showing signs of a sustained recovery.
As the inflation target is achieved, it enhances the central bank’s credibility, which further anchors inflation expectations, which then contribute to a more stable macroeconomic environment, and that, in turn, further builds policy credibility. We should be careful neither to underweight the value of resulting simple heuristics of economic agents nor to minimize the risks of complicating them.