This article was originally presented as a speech at the Global Interdependence Center, Federal Reserve Bank of Philadelphia, August 21, 2003.

This article is a revised English translation of the Thunen Lecture, given at the Annual Congress of the Verein fur Socialpolitik, September 29, 2004, in Dresden, Germany.

Inflation, as measured by the Consumer Price Index, seems to have settled at an annual rate of about 2 percent. Is that rate too low? In this article, William Poole, the president of the Federal Reserve Bank of St. Louis, states his belief that the Federal Reserve's target should be zero...