Let me emphasise, though, that many inflation-targeting central banks retain a considerable degree of flexibility when putting this advice into practice – although in a very different way from the meaning the term “flexibility” has received in theoretical work. I will return to this point shortly.
Simplifying, the inflation-targeting policy advice can be articulated in three main precepts:   First, look at inflation forecasts and output gap forecasts as summary statistics of the state of the economy.