Washington, Oct. 11 (Bloomberg) -- Choosing a specific inflation target for the Federal Reserve to meet wouldn't help the central bank set interest rates, Fed Chairman Alan Greenspan said. Some analysts, including Fed Governor Laurence Meyer, have advocated inflation targeting as a way to restrain inflation expectations and promote open decision-making at the Fed. Greenspan said that wouldn't work, because it is becoming ever more difficult to measure inflation in an age of rapid improvement in medical care, software, and other products that depend on innovations in technology. ``A specific numerical inflation target would represent an unhelpful and false precision,'' Greenspan told a monetary policy conference sponsored by the St. Louis Fed Bank. The Fed chairman didn't discuss current U.S. economic conditions or Fed interest-rate policy in his remarks. In a July 17 speech, Meyer, whose term on the Board of Governors expires Jan. 31, called for a 2 percent inflation target. That would help frame monetary policy discussions among Fed officials, and help investors anticipate when interest rates would be changed. That would help hold down market interest rates, Meyer said in his speech. Greenspan disagreed, offering his own, long-held view that ``price stability is best thought of as an environment in which inflation is so low and stable over time that it does not materially enter in the decisions of households and firms.''

`Complex' Economy
Because the economy is so ``complex and changeable'' the Fed can only influence it in ``nominal,'' or non-inflation adjusted terms, he said. Therefore, the central bank can say explicitly that it wants ``price stability'' and ``maximum sustainable growth'' in general terms, but it can't pin down what either number is or should be at a particular time. A policy ``rule,'' which would allow Fed officials to plug in economic variables and know what to do with interest rates, would be helpful, Greenspan said. ``I hope that someday we can find a reasonable mechanical rule or a reasonably mechanical way in which we can conduct policy. I haven't found it yet,'' he said. The problem is, no one has yet devised a rule that doesn't depend on opinion in its application, he said. ``Like anything else it involves a forecast, and forecasts are just that, they are projections into the unknown,'' he said. ``Regrettably, what we do at the moment is essentially the least-worst way of going about it.''

More Information
Investors do have far more information on Fed policy-making than in years past, Greenspan said. The rate-setting Open Market Committee discloses its decisions immediately after making them, and offers its view of the risks to the economy. Minutes of FOMC meetings are released after each succeeding meeting, and transcripts of meetings are released every five years. In addition, Fed officials regularly make speeches and testify before Congress. ``We endeavor to keep the public well informed,'' Greenspan said. He compared the current level of transparency to Fed decision- making in past decades, when interest rate changes had to be inferred through minor variations in central bank's buying and selling of securities. ``Financial markets work more efficiently when their participants don't have to waste effort inferring the stance of monetary policy from diffuse signals,'' he said. ``Being clear about that stance hasn't constrained our ability to adjust the stance of monetary policy in either direction.''

Open Meetings
Answering critics who've called for further openness on the part of the Fed -- up to and including open, on-the-record meetings -- Greenspan said ``in principle, there is no reason this couldn't be done.'' Most participants in such discussions, however, would probably be intimidated and therefore less candid in offering opinions and assessments, he said. ``Human nature being what it is, the vast majority of us are disinclined to offer half-thought-through, but potentially useful, policy notions only to have them embarrassingly dissected in front of a national television audience,'' Greenspan said. ``The undeniable, though regrettable, fact is that the most effective policymaking is done outside the immediate glare of the press,'' he said. Greenspan said the structure of the FOMC, which normally has 19 members, makes decision-making more difficult. ``You've got 19 members of the full committee around a table discussing the economic outlook. Obviously you're going to get 19 different views at a minimum,'' he said. In its post-decision statement, the committee tries to capture the ``essence'' of the policy debate, he said. ``On occasion we've gotten a little bit verbose in trying to capture everybody's point of view,'' Greenspan said. ``We do the best we can, and I think that overall we've done a reasonably good job of it.''