For a key assumption behind the notion that the ideal path between deflation and inflation can even be found is that inflation expectations remain anchored. Were they to start to drift upwards, policymakers could be presented with an unenviable situation of gathering inflation and ongoing weakness in real economic activity. Their choices would be very bleak indeed in that world. So, expectations remain key.
It would, therefore, be a mistake to weaken commitments to clearly understood goals for inflation, of either the explicit or implicit type. Assuming the present set of monetary frameworks remains in place, then, the real constraints will have to be faced squarely. This only reinforces the importance of maximising productivity growth.