But there is an alternative: The FOMC could target a slightly higher inflation rate for a few years after 2018 in order to make up for the shortfall in the price level. This latter policy approach is often termed price level targeting. 4  BIS central bankers’ speeches  Why would the FOMC want to use price level targeting?
Particularly in terms of macroeconomic and monetary policies, I believe it vital to block off second-round effects such as wage increases, spurred by cost-push inflation spreading to other sectors via inflation expectations and so forth. An important task for the Korean economy from a longer-term perspective, meanwhile, lies in securing financial and foreign exchange market stability.