Hence, the downside misses with respect to inflation cumulate into a significantly lower price level. If my inflation forecast is right, the price level in 2018 will be about 2.5 percent below what it would have been had the FOMC hit its inflation target over the preceding six years.
4  BIS central bankers’ speeches  How should the FOMC respond to this shortfall in the price level? If the FOMC simply targets a 2 percent inflation rate after 2018, then the price level will be permanently 2.5 percent lower than was expected in 2012.