First, the target is symmetric—we are equally concerned about inflation rising above or falling below the target. Second, monetary policy is forward-looking. Policy actions take time—usually six to eight quarters—to work their way through the economy. That’s why our policy decisions are based on where inflation is likely to be in the future, not where it is today.
And third, our framework is straightforward to communicate and has come to be well understood. 1 Since moving to the 2 percent inflation target in 1995, the unemployment rate has averaged  7.4 percent, compared with 8.9 percent in the 15 years before we had an inflation target. Taking a long-term perspective underscores the amazing success of flexible inflation targeting.