will discuss, the depth and liquidity of the markets for U. S. government securities would make it difficult for the Fed to peg rates beyond a horizon of two years or so Although unconventional tools can increase the potency of monetary policy, the ZlB is still likely to be a binding constraint on the monetary response to a downturn that is more serious, or which occurs when rates remain(like today) below neutral levels. A second broad response to the problem is to modify the overall policy framework, with the goal of enhancing monetary policymakers'ability to deal with such situations(Williams, 2017). Focusing on the case of the Federal Reserve, in the second principal section of the paper i briefly consider two proposed alternatives: (1) raising the Feds inflation target from its current level of 2 percent, and(2)introducing a price-level target. I argue that a higher inflation target has a number of important drawbacks: It would, obviously, lead to higher average inflation(possibly inconsistent with the Feds mandate for price stability); and, more subtly, it implies a Fed reaction function that theoretical analyses suggest is quite far from the optimal response. A price-level target performs better on both counts, as 1)it is fully consistent with the goal of price stability, perhap even more so than an inflation target; and 2)it implies a"lower-for-longer" response to periods when rates are at their ZlB, which approximates what theory tells us is the optimal approach However, a price-level target can be problematic in the face of supply shocks and the switch to a price-level target from the current inflation targeting approach would be a significant communications challenge. In the latter part of the section, I propose and discuss a third possible alternative: a temporary price-level target that kicks in only during periods in which rates are constrained by the ZlB. I argue that the adoption of a temporary price-level target would be likely to improve economic performance, relative to the current framework. Importantly, it would do that while both maintaining price stability and requiring only a relatively modest shift in the Feds framework and communication policies. However, this proposal is a tentative one at this stage, and more analysis would be needed before taking it further Beyond the problems arising from low nominal interest rates, monetary policymakers also face challenges to central bank independence(CBi). The challenge to CBI has been heightened by the political blowback that followed the financial crisis. But, as already noted, questions about CBI are also related to the change in the macroeconomic and interest-rate environment, linking this issue to the themes of the first part of the paper. In the United States the doctrine of CBI emerged, in part, from the inflationary experience of the 1960s and 1970s,3 will discuss, the depth and liquidity of the markets for U.S. government securities would make it difficult for the Fed to peg rates beyond a horizon of two years or so. Although unconventional tools can increase the potency of monetary policy, the ZLB is still likely to be a binding constraint on the monetary response to a downturn that is more serious, or which occurs when rates remain (like today) below neutral levels. A second broad response to the problem is to modify the overall policy framework, with the goal of enhancing monetary policymakers’ ability to deal with such situations (Williams, 2017). Focusing on the case of the Federal Reserve, in the second principal section of the paper I briefly consider two proposed alternatives: (1) raising the Fed’s inflation target from its current level of 2 percent, and (2) introducing a price-level target. I argue that a higher inflation target has a number of important drawbacks: It would, obviously, lead to higher average inflation (possibly inconsistent with the Fed’s mandate for price stability); and, more subtly, it implies a Fed reaction function that theoretical analyses suggest is quite far from the optimal response. A price-level target performs better on both counts, as 1) it is fully consistent with the goal of price stability, perhaps even more so than an inflation target; and 2) it implies a “lower-for-longer” response to periods when rates are at their ZLB, which approximates what theory tells us is the optimal approach. However, a price-level target can be problematic in the face of supply shocks, and the switch to a price-level target from the current inflation targeting approach would be a significant communications challenge. In the latter part of the section, I propose and discuss a third possible alternative: a “temporary price-level target” that kicks in only during periods in which rates are constrained by the ZLB. I argue that the adoption of a temporary price-level target would be likely to improve economic performance, relative to the current framework. Importantly, it would do that while both maintaining price stability and requiring only a relatively modest shift in the Fed’s framework and communication policies. However, this proposal is a tentative one at this stage, and more analysis would be needed before taking it further. Beyond the problems arising from low nominal interest rates, monetary policymakers also face challenges to central bank independence (CBI). The challenge to CBI has been heightened by the political blowback that followed the financial crisis. But, as already noted, questions about CBI are also related to the change in the macroeconomic and interest-rate environment, linking this issue to the themes of the first part of the paper. In the United States, the doctrine of CBI emerged, in part, from the inflationary experience of the 1960s and 1970s