On the Fed's Cred and Inflation Targeting: Echoes

Credibility matters. It's hard to gain, and easily lost. As we pointed out earlier this week, Paul Volcker managed to harness inflation (and, perhaps more importantly, inflation expectations) in the 1980s through ruthless adherence to high interest rates. In doing so, he established the Federal Reserve's credibility on price stability.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.