Under this regime, a central bank, in this case the Federal Reserve, announces an inflation target and commits to keeping inflation near the target at some horizon while recognizing that inflation may deviate from the target on occasion as other important objectives take on temporary urgency. This approach is in interesting middle ground, but I think advocates of it must recognize some concerns.
It seems that a declining trend in these countries’ long-term interest rates involves the effects of powerful monetary easing, including asset purchases. More recently, the trend of risk aversion on the back of concern over a slowdown in the global economy and the European debt problem has been further encouraging a decline in long-term interest rates.