Recognizing the importance of communications as a policy tool, the FOMC has been engaged in a conversation about how we might better explain our framework for decision-making. In designing its communications, the FOMC faces complexities that make clear communication more difficult than you might think. First, we need to explain the way we think about both parts of our dual mandate.
Establishing a target for inflation is a tool used by many central banks to anchor inflation expectations. Central banks can establish such a target because, over the longer run, inflation is determined primarily by monetary policy.