Why Central Banks Are Raising Their Inflation Targets

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jun 14, 2026 · 11m · transcript

Episode 50 of Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates. Today, Lucas and Luna dig into a quietly seismic shift in central banking: the move to raise long-term inflation targets. The Bank of Canada recently completed a five-year framework review and set a new 2.5 percent target, up from 2.0 percent. The Federal Reserve has internally debated a similar move in its 2025 review. Lucas explains the logic—giving central banks more room to cut rates during downturns, reducing the risk of hitting the zero lower bound—and the risks: unanchored…