Suppose the Fed pursues a policy with a (geometric) average ination target of 2%

over a three-year period (that is, from t to t + 1, from t + 1 to t + 2, and from t + 2 to

t+3). However, imagine now that the rst year's ination rate (the ination rate from

t to t + 1) ends up being below target, at 0%. What will the next two years' in

rates have to be for the Fed to live up to its ination policy?