As usual, my remarks reflect only my own views and are not intended to reflect those of the Federal Open Market Committee (FOMC) or of anyone else associated with the Federal Reserve System. 1 What is the optimal level of the inflation rate? Research in monetary economics usually specifies monetary policy objectives in terms of stabilizing both inflation and economic activity.
2 Those two goals are related: Maintaining price stability promotes stronger economic activity in the long run. What do we mean by price stability?