Fed Inflation Goal Is More Politics Than Policy: Evan Schnidman

Feb. 6 (Bloomberg) -- The Federal Reserve’s decision lastmonth to set a soft inflation target is the latest in a seriesof steps the central bank has taken in recent years to improvepolicy transparency. It’s also the most controversial amongeconomists, and with good reason.

In 2004, Frederic Mishkin, an economics professor atColumbia University who later became a member of the FederalReserve Board, engaged in a written debate on the issue with BenFriedman of Harvard University in the journal InternationalFinance. Mishkin based his argument on work he had done withnow-Fed Chairman Ben S. Bernanke. Their work contends thatinflation targeting increases transparency and doesn’t limitpolicy options for central bankers but rather provides“constrained discretion.”