Patrick Horan and Andrea O’Sullivan for the Mercatus Center: There are two major problems with the way that the Fed makes monetary decisions.

The first is the ambiguity of the Fed’s “dual mandate,” which places the central bank in the immensely difficult position of chasing low unemployment and low inflation at the same time. To deal with this conundrum, the Fed has settled on a two percent inflation target as the most consistent way to achieve this goal. But it sometimes deviates from this ideal because inflation and unemployment are not always in sync.