Based on our main measure—the price index for personal consumption expenditures excluding food and energy, or the core PCE price index—consumer inflation was 2.2 percent over the past year, which, as I indicated, is higher than I would like to see.

I prefer inflation to be between 1 and 2 percent—that's the range that I consider to be most compatible with the Fed's goal of price stability. The monthly inflation rates did come in lower toward the end of the year, and I was pleased to see the improvement. However, it is much too early to say that inflation is no longer a concern. So as I look ahead to this year, I see the economy with some solid underlying momentum behind it and inflation running too high.

If, however, core inflation seems to be settling at a rate above 2 percent, then such an outcome would be unacceptable to me. I put a very high weight on the Fed’s responsibility to maintain low and stable inflation...

My commitment, certainly, is to do what I can to promote policy adjustments that will yield an inflation outcome, on average over a period of several years, centered on 1½ percent on the core PCE price index. Such an outcome will ensure that the FOMC maintains its current high level of credibility. Maintaining price stability is central to maximizing sustainable economic growth and the highest possible level of employment.     

He declined to specify his preferred {inflation} range. ``I'm kind of deferring making a public stand on that until I think through some more things,'' Plosser said.

As reported by Bloomberg News

  "I'd prefer an inflation target of zero, assuming it was possible to exactly measure the rate of purchasing power erosion," Poole said in the interview.
  Since that isn't possible, the Fed should establish a core inflation target of 1%-2%, Poole said, according to the article.
  "A lot would be gained in terms of discussions at the Federal Reserve Open Market Committee," Poole said. "The discussion would be clearer because everybody would mean the same thing when they speak of price stability."
  The discussion on the Fed's communication policy, which could result in the adoption of an inflation target, will probably take some time, Poole added.

From a DJ summary of a FAZ interview.

By my standards, inflation has been too high. I prefer to see it between 1 and 2 percent. But the 12-month change in the price index for personal consumption expenditures excluding food and energy, also known as core PCE, has been running at or above 2 percent for 30 months, and in September it was 2.4 percent. In part, core inflation has been elevated because businesses have raised their prices in response to earlier increases in energy costs. High levels of resource utilization also have added more generally to inflationary pressures.

Looking ahead, it's likely that core inflation will come down somewhat over time. The recent declines in oil prices clearly are a positive factor. And the expected deceleration in economic growth will help avoid sustained pressures from resource constraints. Still, there is a risk that core inflation could run above 2 percent for some time.

There seems to be something of a public perception that {1% to 2%} is a semiofficial range, and from my perspective there's nothing remotely official about it.

As reported by the Wall Street Journal

In the past, I have stated my own personal inflation objective as “zero inflation, properly measured” but have also said that FOMC agreement on an inflation objective, which some might express as a “comfort zone of 1-2 percent inflation,” is more important than which precise specification is selected. There are practical difficulties that can and should be addressed, such as what price index to use, over what period to measure price changes and what degree of tolerance to adopt if inflation runs outside the range. I do not believe that uncertainty about the Fed’s inflation objective is a large issue at present but do believe that there is an opportunity to improve clarity.

This measure rose at an uncomfortably high rate of nearly 2½ percent over the past year. Although it is encouraging that the rate has edged down recently, it has remained a bit above my "comfort zone"—a range between one and two percent that I consider an appropriate long-run inflation objective for the Fed.

I have often noted that my own personal preference is to define “price stability” as a condition in which the rate of inflation, properly measured, is on average zero. I insert the qualifier “properly measured” to point out that actual price indexes may have statistical problems such that zero measured inflation on a particular price index might not in fact reflect a true state of zero inflation. Although my own preference is for zero inflation properly measured, I believe that a central bank consensus on some other numerical goal of reasonably low inflation is more important than the exact number chosen. Thus, I find that recent discussion of a “comfort zone” of 1-2 percent inflation measured by the price index for personal consumption expenditures, excluding the volatile food and energy components, is perfectly consistent with my own thinking.

I think there's a danger of inflation becoming entrenched at the level it is now with core inflation well over two and I think that most people and I myself personally would like to see it down around one-and-a-half percent..

Right now it's difficult at all times to get a hand on where people in the economy generally expect inflation to be. But right now I think there's, you know, a sense that inflation expectations are contained but having said that, there's a dispersion. There's, you know, a range of view about how rapidly inflation will come back down.
    The longer we let inflation remain, core inflation, remain where it is I think the more likely it is that expectations collapse on core inflation remaining about where it is now rather than declining as I would like to see it decline.
     So that's what I mean by becoming entrenched, becoming firmly lodged in the public's mind as an expectation that that's the inflation rate we're going to tolerate and I think that would be a mistake.

For most of the past year core PCE inflation has been running close to 2 percent, which is at the upper end of the range that I feel is consistent with price stability.

Personally, my comfort zone for core inflation is between 1 and 2 percent—that's the range of inflation rates I consider to be consistent with price stability. But that doesn't mean that I view the 1 to 2 percent range as a "zone of indifference." I think it's better to be in the middle of the range. In fact, some research suggests that an inflation figure of about 1.5 percent strikes a good balance between avoiding the negative effects of inflation with the value of being able to push short-term real rates into negative territory in periods when the economy is weak.

Over the last two months, for example, the core index has increased at a 1.8 percent annual rate as well. To put that number in perspective, it lies close to the 1 ½ percent figure that I and several others have proposed as an announced numerical objective for inflation.

I see an inflation rate of 1-1/2% as measured by the core personal consumption expenditures price index, with a comfort zone extending between 1 and 2%, as an appropriate price stability objective for the Fed. In terms of setting a long-run goal, I think it makes sense to focus our public communication on one specific price index. Doing so is simpler and more transparent than giving out multiple, potentially contradictory, objectives for different price indices.