Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not...

In the wake of the 2008 financial crisis and the ensuing global recession central banks flooded the financial system with liquidity to overcome fears of contagion that froze the credit markets and threatened the solvency of major banks. Accordingly, the Federal Reserve Bank along with central...