Not Bad, But Where Is the Explicit Nominal Target?

There has been plenty said about the FOMC decision to go ahead with QE2.  Let me add that this plan could have packed a lot more punch if the Fed had committed to an an explicit nominal target.  Instead we get several loosey-goosey references in the FOMC press release about Fed needing to keep inflation  at a level consistent with its mandate.  To be fair, Ben Bernanke does mention in his Op-Ed today that most members of the FOMC believe 2% is the inflation rate consistent with a healthy economy. Still, there would be a lot more certainty and wallop to the Fed's action if it would just come out and say "The FOMC is now committed to a X% nominal target and will do whatever is necessary to maintain it." Doing so would go a long way in shoring up and stabilizing inflation expectations.  For some reason, though, the FOMC is afraid to make such an explicit commitment. Maybe it will still do so in the future.  And maybe, just maybe it will really be bold and commit to a NGDP level target.

Here are some of the discussions on the FOMC's decision: Scott Sumner, Ryan Avent, Mark Thoma, Brad DeLong, James Hamilton, Paul Krugman, Gavyn Davies, and Bill Craighead.