Publication

This report discusses a number of implementation issues surrounding an inflation target. These include what rate of inflation to target, what inflation measure to use, whether to set a point target or range, and what penalties to impose if a target is missed. It analyzes the economic arguments for and against shifting to a single mandate. It then analyzes possible effects of a mandate change on Fed policymaking in the context of recent criticisms related to the Fed's performance. It also discusses the advantages and disadvantages of different options for implementing an inflation target.