Despite a firm commitment to price, Glencore made some revisions to the proposal from Friday.
Of course, if no one believes the Fed's commitment to price inflation, spending and employment will not go up.
Financial markets see no reason to doubt the ECB's commitment to price stability: yields on several euro-area governments' ten-year bonds have recently dipped below 3.5%.
A Fed acknowledgment that 2.5 percent inflation would be tolerable for a short while isn't a sign that it has lost its commitment to price stability.
Taking this decision now, at a time of continuing uncertainty, shows our absolute commitment to pricing competitively, with customers at the forefront of our minds".
In December he noted:The public's understanding of the Federal Reserve's commitment to price stability helps to anchor inflation expectations and enhances the effectiveness of monetary policy, thereby contributing to stability in both prices and economic activity.
He must be firm about the Bundesbank's commitment to price stability, but make clear that the relevant measure is price stability in the euro zone as a whole.
"As we learned from the experience of the 1970s," Mr. Plosser added, "once the public loses confidence in the Fed's commitment to price stability, it is very costly to the economy for the Fed to regain that confidence".
"There was this belief in Germany and other countries that if you set up a hard monetary commitment to price stability, you would scare unions and politicians into reforms," said Adam Posen, deputy director of the Peterson Institute for International Economics in Washington.
Moving those responsibilities, now shared by a patchwork of agencies, to a separate body, as Mr Paulson first proposed, could both rationalise America's regulatory structure and make the Fed a smaller political target.The Fed itself could do more to ensure that its eventual mix of duties does not interfere with its commitment to price stability.
However, I think it might worth pointing out that this whole line of thought began with this paper (pdf), which declares early on that a liquidity trap fundamentally involves a credibility problem-but it is the inverse of the usual one, in which central bankers have difficulty convincing private agents of their commitment to price stability.
