As indicated in the Summary of Economic Projections, FOMC participants have, over the past seven years, repeatedly revised down their estimates of both u* and r* as unemployment fell and real interest rates remained well below prior estimates of neutral without the rise in inflation those earlier estimates would have predicted (figures 1 and 2).
Inflation targeting has been an increasingly popular framework since it was first adopted by New Zealand in 1990. Most studies have shown that it has been a useful framework for assisting in bringing down and maintaining inflation at low levels.