This is from the FOMC minutes of their last meeting (my bolds):
More broadly, a number of participants expressed concern that switching to a new policy framework could heighten uncertainty about future monetary policy, risk unmooring longer-term inflation expectations, or fail to address risks to financial stability. Several participants observed that the efficacy of nominal GDP targeting depended crucially on some strong assumptions, including the premise that the Committee could make a credible commitment to maintaining such a strategy over a long time horizon and that policymakers would continue adhering to that strategy even in the face of a significant increase in inflation. In addition, some participants noted that such an approach would involve substantial operational hurdles, including the difficulty of specifying an appropriate target level. In light of the significant challenges associated with the adoption of such frameworks, participants agreed that it would not be advisable to make such a change under present circumstances.
- Nothing heightens uncertainty more at present than the absence of an explicit TARGET
- If in the long run inflation is determined by money growth, if you specify a growth path for NGDP, how can you unmoor inflation expectations?
- Although financial stability is a separate issue, maintaining a stable path for NGDP avoids worsening any financial “instability” that can come about. In 2008, when NGDP tanked financial problems went up exponentially.
- How can the Committee make a credible commitment? Remember than even without an explicit TARGET the Committee was credible for more than 20 years!
- As in 2 above, if the path of NGDP is adhered to, how can a significant increase in inflation (not defined as a relative price change, but as a “continued increase in the general level of prices”) take place?
But it´s much easier to “fiddle with communication strategies”, even though without a TARGET they are just “empty words”.
Update: Scott Sumner has a more extensive discussion