BOE’s Tenreyro: UK could benefit from higher inflation target

Speaking at a European Central Bank (ECB) conference on Tuesday, the Bank of England (BOE) policymaker Silvana Tenreyro said that the UK’s inflation target reflected a pre-crisis world of much higher average interest rates.

Additional Quotes:

Conventional monetary policy is more likely to run up against the (zero lower bound) constraint.

If we were starting over, a lower equilibrium rate of interest might suggest that a slightly higher inflation target could have been helpful to avoid running against the effective lower bound so often. But there are obviously costs to changing the framework now.

Stressed the importance of BOE’s flexible approach to inflation targeting.