The Sept. 26 decision by the Federal Reserve to maintain status quo in monetary policy in the face of mild inflation and a relatively restrictive federal funds rate draws attention to the Fed's objectives and operating guidances.

Clearly, the Fed's objective, often stated, is price stability, in fact and in perception. Perception is important because the Fed's goal is to eliminate the expectation of inflation from decision making. However, the Federal Reserve has never defined price stability - what rate of price increases, by what measure, for how long?

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