operates under a governmental mandate declaring that the long - term objective of monetary policy is to maintain the domestic and international value of its currency. the european central bank ( ecb ) operates its regime under authority delegated by the treaty establishing the european community, with the primary goal of price stability established by the treaty. lessons are more diffuse from the last wave of countries to adopt inflation targeting. brazil's adoption of inflation targeting in 1999 was preceded by a presidential decree. hungary and poland adopted inflation targeting following parliamentary acts stipulating that price stability was the main objective for the central bank. but in two cases, mexico and the czech republic, the central bank moved to inflation targeting on its own. in the czech republic, subsequent legislation enshrined price stability as the main objective of the central bank, but not in mexico. although these regimes differ from one another, there is at least some governmental involvement in all but the mexican case. the level of involvement ranges from new zealand's explicit governmental guidance to other, much more flexible arrangements that give the central bank fairly wide latitude in establishing target ranges, choosing indexes, and choosing time periods over which to meet the price stability objectives. there may also be a correlation between governmental involvement and the strictness of the inflation - targeting regime. involvement has been the greatest in the strictest regime, new zealand, and is noticeably less in the more flexible regimes. the united states the main country that has not adopted inflation targeting is the united states. although academic economists and many others have for years been urging the federal reserve to adopt inflation targeting, legislators have shown very little interest in the issue. congressman jim saxton of new jersey, chairman of the joint economic committee, has introduced an inflation - targeting bill several times, but the bill currently has no cosponsors and has not been reviewed recently in committee hearings. previous inflation - targeting bills have fared no better. this lack of congressional momentum could be interpreted as lack of congressional support for inflation targeting, or it could merely reflect a more neutral absence of strong opinions. given the absence of firmer congressional guidance, the federal reserve has continued to operate under the full employment and balanced growth act of 1978. this act directs the fed to " promote effectively the goals of maximum employment, stable prices, and moderate long - term interest rates. " should these goals be in conflict, it is up to the fed to resolve the problem. to say the least, the u. s. approach is a rather

problem, but there could be at least a political awkwardness to such a situation. the federal reserve is responsible for many controversial policies - sometimes its approval or disapproval of bank mergers is controversial, sometimes its safety and soundness supervision is controversial, and sometimes its consumer protection regulations are controversial. at any point, some observers and some politicians are likely to be upset at the fed for one reason or another. were the inflation rate temporarily outside the target band, even for good economic reasons, the mere existence of inflation targets could be another excuse for tension between the fed and the congress. there is almost always at least potential tension between the fed and the congress, and both sides have learned how to handle it. but at least some danger lies in introducing new possibilities for tension. none of these supposed political costs of inflation targeting are certain, all could be readily handled, and it is at least possible that only vague congressional support for inflation targeting would ultimately be necessary. but we should recognize that same clarity of inflation targeting that has generally proved advantageous in other countries contains at least the seeds for potential disagreements in the united states. conclusion all debates about whether the united states should adopt inflation targeting are fairly amorphous, balancing speculative theoretical considerations and imaging hypothetical situations. given the good inflationary performance of the american economy in the past decade, the question of whether to adopt inflation targeting has never been an all - out do - or - die issue. the most that pro - targeters have been able to claim is some possible benefits ; and anti - targeters, some possible costs. in this amorphous debate, the political questions are perhaps the most amorphous of all. but surely it is relevant that, in other countries that have adopted inflation targeting, the parliamentary governments have generally been strong supporters, whereas in the united states administration and congressional support has ranged from weak to non - existent. this lack of support could well change as the administration and the congress became more familiar with inflation targeting and, in particular, the possible flexibility of the regime. but if it does not change, or if it takes the form of inappropriate targets for other macroeconomic objectives, it becomes a definite impediment to the adoption of inflation targeting by the united states.