Central Banks Are Too Credible On Inflation Fighting

The US Federal Reserve has a dual mandate, and presumable central banks around the world have similar mandate. They are supposed to employ monetary to provide price stability and employment stability.  This article suggests that they have won the battle against inflation expectations.  Inflation expectations are low in the US and in Europe. They are more reluctant, however, to take the needed steps to increase employment.  They worry that this would increase inflation expectations. In other words, they place a higher value on price expectations than they do on employment stability.  Krugman, along with many other economists, argues that the central banks may get their wish. Price deflation, and slow economic growth, may be the outcome of their policies.