{
  "id": 10129111,
  "title": "Es hora de replantearse los objetivos de inflación",
  "url": "https://urgent.news/2026/09/27/es-hora-de-replantearse-los-objetivos-de-inflacion",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-27T03:30:00.000Z",
  "source": {
    "name": "El Pais Economia",
    "slug": "el-pais-economia",
    "url": "https://elpais.com/economia/negocios/2026-09-27/es-hora-de-replantearse-los-objetivos-de-inflacion.html"
  },
  "original_language": "es",
  "account": "After the 2007-2008 global financial crisis, the world's leading central banks focused on combating deflationary pressures for over a decade, while academic discourse centered on secular stagnation and its implications for monetary policy. However, starting in 2021, the landscape shifted dramatically, with double-digit inflation rates becoming commonplace. Central banks were caught off guard and blamed unexpected factors, primarily the COVID-19 crisis. This suggested there was no reason to tighten monetary policy, but this diagnosis proved to be a serious mistake. It stemmed from the failure of traditional inflation prediction methods, largely based on neo-Keynesian models. A series of demographic, environmental, and geopolitical disruptions, especially the pandemic, should have led central banks to be cautious about relying on these models. After all, Nobel laureate Robert Lucas' critique is commonplace in macroeconomics: significant disruptions can alter relationships between key economic variables, making models lose predictive power. Despite difficulties explaining price evolution through supply and demand, other indicators clearly signaled inflationary pressures. Only central banks that had long ignored monetary developments could have missed the rapid growth of monetary supply, fueled by massive public debt issuance and large-scale bond purchases by central banks. The instability of money demand had led most economists to deem the monetarist recipe of setting monetary supply targets obsolete. But does this mean the 25% increase in M2, a broad measure of monetary supply in the US in 2021, deserved no attention? Is it surprising that, contrary to central bank predictions, inflation also skyrocketed? It was challenging to comprehend that these extraordinary monetary events were overlooked. Surprisingly, the major central banks not only failed to publicly acknowledge this oversight but also failed to seriously reevaluate their monetary policy strategies, which had failed so spectacularly. The exception was Kevin Warsh, the new president of the US Federal Reserve, who recently criticized the Fed's lack of attention to monetary supply and created five independent working groups to reassess the central bank's policies, one of which will focus on the current inflation framework. How can we explain the majority of central banks' resistance to conducting an unbiased analysis of what went wrong? One answer lies in the unwavering faith of monetary policy makers in the effectiveness of inflation targets, which has prevented them from seeing their deficiencies. Inflation targets do not leave room for the role of monetary evolution and lack a model that integrates risks from the banking and financial systems, with all their dynamics, non-linearities, and complexities. Such a strategy is destined to fail when these risks become overwhelming. The resistance of most central banks to perform an impartial analysis of what went wrong stems from their unquestionable faith in the effectiveness of inflation targets, which has prevented them from seeing their shortcomings. Inflation targets do not allow for the role of monetary evolution, and lack a model that integrates risks from the banking and financial systems, with all their dynamics, non-linearities, and complexities. This strategy is doomed to fail when these risks become overwhelming. A robust monetary policy strategy resilient to economic uncertainty must be based on an analytical framework that integrates all relevant factors into a coherent global view. The European Central Bank's (ECB) \"two-pillar strategy\" is based on the fundamental understanding that no single comprehensive model can encompass the economy in its entirety. This remains true today. The two-pillar approach combines an analysis of real economic evolution— including inflation forecasts— with an analysis of monetary and financial trends, including changes in monetary supply. Both then cross to obtain a calibrated global assessment of the economic situation. It is worth recalling how the ECB described the two-pillar strategy in its November 2000 Monthly Bulletin: \"Given its adopted diversified approach to interpreting economic conditions, the ECB's strategy can be considered as facilitating the adoption of a robust monetary policy in an environment of uncertainty.\" One might wonder if there is an even greater need for this solidity in the face of current high uncertainty. While the two-pillar approach is certainly subject to criticism and improvement, its main advantage lies in the fact that individual factors are never examined in isolation. Instead, they are always evaluated in the context of economic and monetary evolution. Therefore, continuous review is an integral part of this strategy. It is difficult to understand why the ECB, in its 2021 monetary policy review, abandoned the two-pillar strategy. By its very nature, inflation targets offer no coherent way to integrate factors alien to inflation forecasting into the monetary policy decision-making process.",
  "summary": "Resulta difícil de comprender por qué el BCE abandonó en 2021 la estrategia denominada como los dos pilares",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}