In practice, most Fed officials monitor a collection of inflation indicators in an attempt to discern the underlying trend. There are worrisome aspects of the current inflation picture, and reading underlying trends is problematic at present. Hold that thought. I’ll emphasize the centrality of inflation concerns a little later. Maximum, or full, employment is less explicitly defined.
Most economists assume that what constitutes full employment changes over time. Structural shifts in the economy cause the natural rate of unemployment to move around. For a good part of the recovery period, a number of Fed policymakers, me included, have estimated the unemployment level consistent with full employment as between 5 1/4 and 5 1/2 percent or a little higher.