Mervyn King attacks central bank theories of inflation
Expectations are “too fragile” to serve as an anchor for inflation, former BoE governor says
Central banks risk being led astray by the dominant theories of inflation, Mervyn King warned on November 23, in a speech calling for a “more robust and resilient approach to monetary policy”.
King, a former governor of the Bank of England, said the models that “dominate central bank thinking” are too reliant on expectations. He called the models the “King Canute theory of inflation”.
“A thousand years ago, King Canute of England set his throne by the seashore and commanded the incoming tide
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