ECB Inconsistency (fg)

Last ECB conference on "the role of money: money and monetary policy in the twenty-first century" was the renewal of the wrestling match inflation targeting vs. monetary targeting. Woodford and his U.S. followers in the left corner, retired Issing and his allies in the right corner.

First round- Woodford wins; see his paper on the role of money.

Second round- What a punch: Tag team Reichlin and friends proove money demand to be instable for euro zone. Phu, that must hurt!

Third round- Show time: Issing dashes forward claiming that inflation targeting is incomplete, short-winded and single-edged. The wise Goodhart supports Issing attacking Woodford and friends from behind: The future of central banking must take financial stability into account by monitoring a multitude of financial and credit variables in an environment of uncertainty.

Last round- Tie: Inflation targeting succeeds. However, in targeting inflation you will also use money and credit information in building inflation forecats and prospects of economic outlook.

Result- As a recent commentator put it forward:

Of course in targeting inflation you will use all information you have to forecast its course accurately- monetary information will probably enter this. But not as a second pillar, wrenching the whole inflation judgement periodically out of its sockets!

Looser- ECB!