Comment on ‘Monetary Policy Issues in a Low-Inflation Environment’ by José Vinals

Let me begin by stating categorically that, whatever else I may say today, I am for Price Stability. I'm also for Motherhood and apple pie. Of course, what I mean by that is that everyone is for price stability, but they often mean somewhat different things by it. How low an inflation rate should constitute price stability? Is zero the right number? Should we target the general level of prices, in addition to a low inflation rate? What indicators should central banks use to gauge the stance of policy and to guide their actions? These are some of the key questions for monetary policymakers today. In large part, these questions involve assessing the costs and benefits of policies and outcomes that most economies have not experienced recently (or ever). As a result, conclusions about price level targeting and zero inflation and asset-price targeting must depend strongly on assumptions underlying economists' models and counterfactual model experiments. While the consensus on maintaining relatively low inflation arises from historical success and conformity of public