For the creator of one of the most important monetary policy principles of the last decades, "an inflation target is not enough, it is necessary to follow a policy strategy" in establishing and complying with the inflation targeting scheme.
John Taylor (71), a Stanford professor and former US economic adviser Gerald Ford, Jimmy Carter, and George H. Bush, consider To reduce inflation in countries like Argentina, the key is not in a number to be achieved, but in a "clear intention and well communicated in terms of tools used.".
In his visit to the country for a conference at CEMA University, the monetary policy expert and creator of the Taylor Rule – which establishes a relationship between interest rates, inflation and desired growth in an economy – held a meeting with Infobae and other means.
The academic highlighted the transparency of monetary policy which leads by Guido Sandleris, the president of the Central Bank, with whom he met moments before his conference. "The simple fact of being able to see the foreign exchange bands and the advance of the monetary base in the page of the Central Bank is very positive," he said.
Taylor defines himself as an advocate of inflation targets, but believes that these are not so useful "at times where there is very high inflation or deflation – The fall in prices – but it has better results in an area that is in the middle of these situations. "" Even in the United States it was tried and it did not work, "Taylor explained, before clarifying that when his country finally managed to lower inflation" there was never a goal of a specific number, they said "we want inflation to be so low as possible ".
In this sense, the economist summed up, "the intention and the policy to reach it are the most important," and not necessarily a specific number that is sought. "We must distinguish the operation in the monetary policy rules of a regime for the transition from a high rate of inflation to a low," Taylor said in explaining why. a scheme of inflation targets was not "necessarily" the best option to reduce the price increase, as the Government sought during the presidency of Federico Sturzenegger in Central.
In comparison, the father of the method used by several countries when determining interest rates, said: "When the US settled its own inflation problem, they first attacked the money supply and then went on to focus on ". That is why, he adds, the current approach of Central Freeze the monetary base, or the amount of money circulating in the economy plus some monetary aggregates, is correct.
In response to a question recessive effect that is assigned to the high interest rates of the Central Bank, the scholar emphasized that the first-order priority in any economy with price jumps, such as Argentina, "is inflation can be reduced, and the rest of the variables are accommodated."For rates to fall, he concluded," the main thing is to look at inflation expectations, the correlation is like this: when expectations fall, rates fall and not the other way around. "