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Much of the language used to describe monetary policy, such as steering the economy to a soft landing or a touch on the brakes, makes it sound like a precise science. Nothing could be further from the truth. The link between interest rates and inflation is uncertain. And there are long, variable lags before policy changes have any effect on the economy. Given all these disadvantages, central bankers seem to have had much to boast of about late. Average inflation in the big seven industrial economies fell to a mere 2.3% last year, close to Its lowest level in 30 years, before rising slightly to 2.5% this July. This is a long way below the double-digit rates which many countries experienced in the 1970s and early 1980s. It is also less than most forecasters had predicted. In late 1994 the panel of economists which The Economist polls each month said that Americas inflation rate would average 3.5 % in 1995. In fact, it fell to 2.6% in August, and is expected to average only about 3% for the year as a whole. In Britain and Japan inflation is running half a percentage below the rate predicted at the end of the last year. This is no flash in the pan; over the past couple of years, inflation has been consistently lower than expected in Britain and America. Economists have been particularly surprised by favorable inflation figures in Britain and the United States, since conventional measures suggest that both economies, esp. Americas, have little productive slack. Americas capacity utilization, for example, hit historically high levels earlier this year, and its jobless rate has fallen below most | 
