Evans, Charles L. on 2017 November 15 at 03:00
In order to dispel the view that 2 percent is a ceiling, I feel our communications should be much clearer about our willingness to deliver on a symmetric inflation outcome.
By and large, central bankers are conservative types who view their most important task as preventing an outbreak of 1970s-style inflation. So perhaps then it’s not surprising that we as a group have not convincingly demonstrated to the public our commitment to a symmetric inflation target. Indeed, actual inflation outcomes in the U.S. have been far from symmetric. … In order to dispel the view that 2 percent is a ceiling, I feel our communications should be much clearer about our willingness to deliver on a symmetric inflation outcome. This means our public commentary needs to acknowledge a much greater chance of inflation running at 2-1/2 percent in the coming years than I believe we have communicated in the past. … I also worry that giving too much prominence to financial stability considerations in discussions of monetary policy could erode the public’s confidence in our commitment to our 2 percent inflation objective. Financial stability is obviously very important. But there are better tools than monetary policy for promoting it. In contrast, when it comes to meeting our inflation objective, monetary policy is the only game in town. Evans, Charles L.