The FOMC’s actions in 2011 suggest that the Committee is now more concerned about high unemployment, and correspondingly less concerned about the possibility of higher-than-target inflation. Just to be clear: I view the Committee’s current resolution of the trade-off between inflation and unemployment as being justifiable. I also viewed the Committee’s resolution of this trade-off in 2009 as being justifiable.
However, what I see as problematic is that the Committee’s resolution of this trade-off seems to be changing over time. In particular, the Committee’s actions in 2011 suggest that it is now more willing to tolerate higher-than-target inflation than it was in 2009.