9 In addition, consistent with the practices of the FOMC, inflation is measured by the PCE price index as was available in real time, instead of by the CPI. 10 As Slide 4 shows, the alternative Taylor rule prescribes a path for policy that is much closer to that followed throughout the decade, including recent years.
With respect to the meaning of price stability, the Bank clearly stated in a specific expression that “on the basis of a year-on-year rate of change in the CPI, it falls in a positive range of 2 percent or lower, centering around 1 percent”. The Bank calls the expression “understanding of medium- to long-term price stability”.