Ben S. Bernanke argued for 15 years that the Federal Reserve should announce a numerical inflation target. When he finally got his way in January, the victory allowed the central bank to elevate its other mandate: full employment.
By adopting a 2 percent inflation goal, the Fed chairman sought to cement the central bank’s hard-earned credibility for keeping prices low after a 30-year fight against inflation. Bernanke calculated that doing so would anchor expectations for price changes, giving policy makers greater freedom to unleash new stimulus targeted at creating jobs. So far, the move has worked: The Fed embarked on a third round of quantitative easing in September without unhinging inflation expectations.