Monetary policy of the major central banks: the nonsense formula

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Federal Reserve Chairman Jerome Powell

Photo: Kiichiro Sato / AP

Fitness trainers call them the "weekend warriors": stressed office workers who hang in front of their laptops during the week until late at night and do even more dogged sports on the weekend - with several hours of speed runs, preferably with dumbbells and a weight backpack.

If one follows the so-called strategy discussions of the most important central bankers in the world, one could get the idea that they want to operate their monetary policy according to a comparable logic in the near future.

Because they have not been able to lift the price increase to the targeted value of two percent for years, an "average inflation target" should apply in future.

Specifically: if goods and services have become too low in price for a while, prices can then be to the same extent above the target value without the central bank intervening.

Just as the weekend warriors sometimes exaggerate and sometimes understate it, the economy should alternate phases with too low inflation with phases with high inflation.

Jerome Powell, head of the US Federal Reserve, has already officially announced the new strategy.

And ECB President Christine Lagarde, according to her latest comments, is also enthusiastic about the approach.

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