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Ramesh Ponnuru

Better Inflation Targets Will Help in the Next Recession

The current framework is outdated and harmful. Long live the dollar-spending target.

It’s hard to read those clouds on the horizon.

It’s hard to read those clouds on the horizon.

Photographer: Karen Bleier/AFP/Getty Images

Almost 10 years after the Great Recession ended, the growing threat of a new economic slowdown raises a troubling question: When the next recession strikes, what can the world’s central banks do? With interest rates low and their balance sheets still loaded with assets bought to fight the 2008 crisis, do they have the tools to respond? This column is one of six looking at that question.

To its credit, the Federal Reserve is holding a conference this summer on whether it should make changes to how it operates. The first question on its agenda should be how to handle the next recession.