The central bank finds itself in given situation: National economy has been in the slump for several years, but current signs of strength in much of economy have led many forecasters to conclude that expansion could at last be in offing. Nevertheless, unemployment rate is at its highest level in more than 3 decades, even though recent increase in price level may have signaled inflation, that has been dormant for many years, could be about to take off again. What factors point to that central bank must increase its target for nominal interest rate? What factors point out that it must decrease interest rate target? What must central bank do?