(Bloomberg) -- The U.K. is the only major economy likely to be able to boost the inflation target of its central bank, according to a former senior adviser at the Bank of England.
While most global central banks target an inflation rate of 2%, there is a “clear case” for raising this goal, Tony Yates, wrote in a note for Fathom published Monday. The call follows a similar suggestion from Adam Posen, a former BOE policy maker, who has called on central banks around the world to unite in increasing their targets to help them escape from the “stickiness of inflation at low levels.”
Still, no Group of Seven country is likely to make the change soon, “except possibly in the U.K.,” Yates wrote. “There would be no constitutional, treaty, or other restrictions preventing a new government from substantially revising the Bank of England mandate.”
Such a move would be unlikely under a Conservative government, but is more possible should the Labour Party take power, Yates wrote, noting that the opposition has already signaled it is willing to make radical changes to the BOE's mandate.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Andrew Atkinson
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