Inflation Targeting for the United States

During the early months of 2003, there was something of a buzz in monetary policy circles about the prospect of a move toward inflation targeting as a policy regime for the Federal Reserve. One leading manifestation was a prominent article in the Wall Street Journal on March 31 concerning the different points of view recently expressed by Fed Governors Ben Bernanke and Donald Kohn. Of course, there was little or no direct disputation; the WSJ article was based on substantial comments presented by Bernanke and Kohn at different conferences but released at about the same time. Kohn’s comments were delivered at a January 24-25 conference, sponsored by the National Bureau of Economic Research, at which he was the formal discussant of a paper by Marvin Goodfriend (2003). The specific item by Bernanke, mentioned in the WSJ article, is evidently his speech given at a March 25 conference of the National Association of Business Economists. Although there has not been direct disputation, there are significant differences of opinion expressed in the two Governors’ writings, as well as the paper by Goodfriend, differences that mirror important issues and call out for discussion.