A Simple Evaluation of Two Decades of Inflation Targeting: Lessons for the New Monetary Policy Strategy
by Matthew Famiglietti and Carlos Garriga Since the mid-1990s, the Federal Reserve System has either implicitly or explicitly had an annual inflation target (IT) of around 2 percent. The Federal Reserve Open Market Committee’s (FOMC’s) preferred inflation measure to meet this target is core personal consumption expenditures (PCE), which explicitly excludes the prices on food and fuel to…
