Former Bank of Japan Gov. Masaaki Shirakawa called on policymakers to reconsider the central banks' monetary framework based on inflation targets, given their limits that became apparent from the recent spike in prices seen in many countries.
Before the recent spike in inflation, many central banks in advanced economies were "overwhelmingly" concerned about low inflation, and failed to restrain rapid price gains by judging them as transitory, Shirakawa said in a column published by the International Monetary Fund on Wednesday.
By allowing inflation to overshoot their targets, central banks "forgot the difficulty of taking away the monetary punch bowl" and failed to tighten policy soon enough, he said.