Inflation-targeting in the US...

The Fed could raise inflation either by increasing demand, higher demand would increase the price-level, or reduce supply, lower supply would increase prices, relative to each other. Demand-side would work when employment and real wages would go up and supply-side would work for inflation targeting if supply goes down. Both, together, mean that demand should go up in comparison to supply, i.e., demand should go up relative to supply or supply should go down. Moreover, low prices and expectations show that supply is abundant and demand is low. In this situation inflation targeting would lower real wages and demand, supply would outpace demand, prices further would go down. On the opposite, if we lower inflation expectation, lose money-supply would also increase real wage expectations which means more spending and less wage demand due to lower prices could also increase export competitiveness. If prices would fall it would do the both increase demand and also reduce some supply due to lower prices which might help the inflation targeting. However, if the Fed tries to increase inflation by inflation targeting it would reduce real wages expectations and demand and spending and higher prices would further improve supply in the event of low demand and lower prices could fail inflation targeting. Higher inflation expectations would not let inflation targeting work because demand would go down and supply would increase means lower prices, however lower inflation expectations might increase inflation in the future by increasing real wages demand and limiting supply due to low prices...