Federal Reserve officials in the last year, poked by Chairman Ben Bernanke, seriously thought of taking up a clear target for inflation of two percent, but Mr. Bernanke failed to bring out a consensus and backed away. The same issue could resurface in 2011.

The Fed has said informally that its goal is to keep inflation at around two percent. But after carrying on with internal debate on the subject for years, it hasn't taken up an official target.

Proponents stated that if a formal objective is adopted then it would cut criticism of the Fed that current easy-money policies can give rise to an upward spiral in consumer prices and might reinforce the Fed's commitment of evading deflation, or falling prices.

But skeptics think otherwise. They think and worry that if an inflation target is required it could divert the Fed from its fixed congressionally mandate of maximum employment.

President of the Federal Reserve Bank of Philadelphia and a longtime proponent Charles Plosser stated that a clear cut inflation target would help them immensely. Mr. Plosser further stated that he felt like Sisyphus, the mythical Greek who was destined to push a boulder up a hill only to see that it rolls down in his efforts to advance a target.

Plosser went on to say that it helps to build up the credibility of the central bank by being clear cut about its objectives and it helps check expectations on inflation.

Proponents further expressed that inflation targets help to congeal public expectations about price changes, thus making spending decisions and investment simpler. They also stated that targets help to give the public a direction for how the central bank is likely to react.

When inflation is running below target they would expect easy monetary policy and when above they would expect tight policy. It also provides more accountability than vague promises of stable prices.