I remember being surprised a few years ago, to learn the Federal Reserve had an inflation target of 2%. Because I had been under the impression it was 3%, or 2% to 3%.We apparently have people in the UK who don't mind higher inflation. And today during questioning, Bernanke said he doesn't know if the international standard of 2% is right.He stated that the reason for an inflation target above 0% is so that you have room to raise and lower rates for monetary policy above the zero lower bound. And he said people in the past chose 2% because they didn't think 0% was a problem, given past experience. But he said new experience with 0%, persisting for years all over the map, has caused people to reconsider that. And there are some smart people supposedly looking into it. And he will wait to see what they find out.I would hope our central banker would be the most qualified to determine if a 3% inflation target is better. Or to at least have an opinion, or an early guess or suspicion.But in any case, what are the chances the US, or Japan or the ECB (or China or whoever), will have a 3% target rate for inflation in the near future? Could we have one before QE is even done?

Oh, I always think the target is 3%. In data, US historical annual inflation was 3% as far as I can remember. Maybe the market did it for them.

Suppose Bernanke is still in office when unemployment gets to 7%, but inflation is still below 2.5%. It will break his fucking heart, he will not want to stop pumping up inflation. After all, what is 7% unemployment? Crumbs. In anticipation of this, he might actually begin marketing the idea of higher target inflation. "For a time, while we examine the effects of a higher inflation target."