Mostly Economics

Inflation targeting started in NZ in 1989 and has turned 35.

The central bank organised a research conference to understand the challenges to flexible inflation targeting and the opportunities to polish it further in the post-pandemic world.

Croaking Cassandra Blog has an interesting and damning post on Bernanke’s speech at the conference:

Former chairman of the Federal Reserve Board of Governors (and FOMC), Ben Bernanke, was yesterday the first of two keynote speakers at the Reserve Bank’s conference to mark 35 years of inflation targeting, which first became a formalised thing here in New Zealand.  He indicated that he’d be speaking about inflation targeting in general and then about “some lessons from the recent global inflation”.  (I’ve linked to his text above, but you can also find the full session including the Q&As on the Reserve Bank’s Youtube channel).  

Bernanke was the first speaker of the morning and he began his remarks, perhaps somewhat bemusedly, noting that it was “the first conference I’ve ever attended that preceded by a concert” (half an hour or so of it apparently, including singalongs, and described by senior Reserve Bank staff –  so an attendee informed me – as “beautiful”).    That, I guess, was the Orr-led central bank to the last. 

I’ve seen suggestions from a couple of people that Bernanke may have been paid some staggering amount of money to speak.  He certainly still seems to command a high price on the US lecture circuit.  But I’d be surprised if Bernanke cost taxpayers more than return business class airfares and associated accommodation etc.   This conference was a non-commercial event inside the central banking world.  And a year or two back Bernanke did a major review of forecasting for the Bank of England, and seems to have been very generous with his time and own resources.   Call it a loss leader, or just something he was interested in.  Either way, the British taxpayer didn’t pay much at all.

Unfortunately, if Bernanke didn’t cost much, he didn’t offer much beyond his name.    It was a fairly short speech (7.5 pages of text), the first two-thirds of which was about inflation targeting in general.  It would be really surprising if anyone at the conference either learned anything new from that section or was prompted to think differently about any aspect of monetary policy or inflation targeting.  It was almost entirely descriptive, with no attempts to suggest refinements or even to knockdown what he might think were dead-end variants.  There wasn’t even a mention – amid the observation that the Fed’s target is “well understood by financial markets, legislators, and other observers – of the questionable experiment with “flexible average inflation targeting”.

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