Properly designed and implemented, such an overshoot can offset the inflation undershoot during “bad” times so that the longer-run average inflation rate and inflation expectations are in 2/3  BIS central bankers' speeches  line with the target. The third option is price-level targeting, including its various offshoots, such as nominal GDP targeting and temporary price-level targeting. In such a regime, the central bank commits to keep the price level near a steadily growing target path. Like average-inflation targeting, this strategy promises to overshoot the target inflation rate in “good” times to make up for the inflation undershoot when policy is constrained. In theory, both average-inflation and price-level targeting can solve the problem of anchoring inflation expectations at the target rate while maintaining a low inflation target rate amid low neutral rates. Although price-level targeting is a bigger leap from inflation targeting than averageinflation targeting, each can be implemented in ways that are very similar to standard inflation targeting, either in terms of forecast-targeting or a policy rule.6 Importantly, neither will likely be effective in practice unless communicated clearly and carried out consistently over time. More broadly, all of these proposed strategies face potential costs and benefits—in terms of macroeconomic performance, communication, and robustness to uncertainty—which require careful study. In considering alternative monetary policy strategies, academic experts, policymakers, and others from around the world have an important part to play, sharing and discussing ideas and comparing experiences to help all of us to think through these issues.

John C Williams: Monetary policy strategies for a low-neutralinterest-rate world Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the 80th Plenary Meeting of the Group of Thirty, Federal Reserve Bank of New York, New York City, 30 November 2018. * * * As prepared for delivery I would like to start by thanking Tharman for the invitation to participate in this panel of esteemed current and former policymakers. I am also pleased to continue the long tradition of hosting the Group of Thirty at the Federal Reserve Bank of New York and very much look forward to this morning’s discussion. In my remarks, I will focus on the following question: What long-run monetary policy strategy is best suited to anchor inflation expectations, foster price stability, and promote maximum employment? I emphasize the phrase “long-run” because I will focus on the features of a systematic policy framework, rather than tactical policy decisions. This topic is not only of academic interest: As was recently announced, the Federal Reserve is embarking on a review of its long-run monetary policy framework.1 I will argue that the global decline in the neutral rate of interest over the past quarter century poses significant challenges to maintaining wellanchored inflation expectations in a standard inflation-targeting regime. I will then lay out some alternative policy strategies that have the potential of providing a solid anchor for inflation expectations—even with a very low neutral interest rate—while preserving broad continuity with current inflation-targeting practice.