Should the unanticipated slowing of inflation that has occurred since early 2012 raise doubts about the reliability of inflation forecasts? We answer this question by conducting a few exercises with a common macroeconomic forecasting model. Our results indicate that even though inflation turned...

An explanation of why, in the face of a booming economy, low unemployment, and scant inflation pressures, the Federal Reserve must continue its campaign to achieve price stability.

An argument that adopting specific inflation targets as a way of achieving price stability would enhance the United States' economic performance.