Williams favours average inflation targeting in new research

John Williams
Shell Jiang

A central bank can eliminate the effects of below-target inflation expectations by implementing an average-inflation targeting regime, Federal Reserve Bank of New York president John Williams finds.

In a paper, Williams and co-author Thomas Mertens analyse the effects and implementation of three monetary policy frameworks when faced with a lower neutral rate and a lower bound. The frameworks include “standard” inflation targeting, average inflation targeting and price-level targeting.

The

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