The Future of Inflation Targeting* (original) (raw)

By the end of the Great Moderation, over two dozen central banks were formal in ‡ation targeters, and others, such as the Federal Reserve, the European Central Bank, and the Swiss National Bank behaved essentially as in ‡ation targeters even though they were resistant to identifying themselves as such. However, the past three years have seen central banks faced with new challenges, and these have raised questions about the future of in ‡ation targeting as a framework for the conduct of monetary policy. I consider three suggested modi…cations to this policy framework: incorporating additional goals among a central bank's objectives; raising the average target for in ‡ation; and switching to price level targeting.