Inflation Targeting

• President Bullard's Remarks
• Articles and Commentary
• Conferences and Proceedings
• St. Louis Fed Working Papers

Inflation Targeting:
President James Bullard's Remarks

Resources from the Federal Reserve Bank of St. Louis

"Inflation targeting in the U.S. will be flexible, matching a desire to keep inflation low and stable in the long run with the challenge of providing some business cycle stabilization in the shorter term."

Source: "Inflation Targeting in the USA"
Speech, February 6, 2012. Delivered at the Union League Club of Chicago, Breakfast@65West, Chicago, Ill.

"Inflation targeting is another way to force more accountability to the central bank and anchor longer-term inflation expectations. Make the central bank say what it intends to do, and hold the central bank accountable for achieving the goal. In this sense, inflation targeting is the modern successor to a commodity standard."

Source: "Commodity Prices, Inflation Targeting, and U.S. Monetary Policy"
Speech, May 24, 2011. Delivered at the 2011 Joint Meeting of the Cape Girardeau and Jackson Rotary Clubs, Cape Girardeau, Mo.

"To solidify its position that overall inflation is a goal of monetary policy, the Fed should adopt an explicit, numerical inflation target in terms of headline inflation as many other central banks—such as the European Central Bank and the Bank of England—have done. By adopting an explicit headline target, the Fed would keep faith with U.S. citizens that it will work to keep overall inflation low and stable."

Source: "The Fed Should De-emphasize Core Inflation"
Op-Ed, Southeast Missourian, May 25, 2011.

"Measuring Inflation: The Core Is Rotten"
Federal Reserve Bank of St. Louis Review, July/August 2011.

An earlier version of this article was delivered as a speech to the Money Marketeers of New York University, New York, May 18, 2011.

"President Bullard on Bloomberg Radio"
Interview, January 5, 2012.

During an interview on "Bloomberg Surveillance," St. Louis Fed President James Bullard shared his views on inflation targeting, unemployment, the European situation and the outlook for the economy.

"A Two-Headed Dragon for Monetary Policy"
Speech, January 3, 2009.

Delivered at the National Association of Business Economics Panel on "Long-Run Economic Challenges: A Federal Reserve Perspective," Annual Meeting of the American Economic Association, San Francisco, Calif.

"The Optimal Inflation Target in an Economy with Limited Enforcement"
Federal Reserve Bank of St. Louis Working Paper 2007-037C, September 2007, Revised January 2010 (with Gaetano Antinolfi and Costas Azariadis). Presented on October 2, 2008, at Indiana University and on October 10, 2008, at New Perspectives on Monetary Policy Design, sponsored by the Bank of Canada and the Centre De Recerca en Economia Internacional, Barcelona, Spain.

Abstract: We formulate the central bank's problem of selecting an optimal long-run inflation rate as the choice of a distorting tax by a planner who wishes to maximize discounted stationary utility for a heterogeneous population of infinitely-lived households in an economy with constant aggregate income and public information. Households are segmented into cash agents, who store value in currency alone, and credit agents who have access to both currency and loans. The planner's problem is equivalent to choosing inflation and nominal interest rates consistent with a resource constraint, and with an incentive constraint that ensures credit agents prefer the superior consumption-smoothing power of loans to that of currency. We show that the optimum inflation rate is positive, because inflation reduces the value of the outside option for credit agents and raises their debt limits.

"Understanding the Inflation Targeting Debate"
Federal Reserve Bank of St. Louis Monetary Trends, December 2005.