If the Fed follows a policy of targeting the inflation rate:

Question

Quizplus · Accepted Answer

If the Fed follows a policy of targeting the inflation rate, it will likely face fewer political pressures as it will have a clear objective to achieve. This will reduce uncertainty and allow for better coordination between the Fed and other policymakers. In addition, by targeting inflation, the Fed can maintain credibility in the eyes of the public and financial markets, which is crucial for its effectiveness.

If the Fed Follows a Policy of Targeting the Inflation