Can a central bank’s monetary policy serve two masters? That’s more than an academic question for the United States. The dollar is the world’s reserve currency as well as the domestic medium of exchange. As a result, the Federal Reserve is charged with making monetary decisions that, in a perfect world, serve both local and international objectives at once. Can both be done without compromise? Or is there an inherent conflict of interest in the two? Not to worry, writes William Gavin, vice president and economist at the St. Louis Fed, in a new essay that today becomes the latest addition to our Research Room. Fear not: a central bank can manage its currency for the benefit of its citizens and the global economy without doing injustice to either. The device that lets the Fed burn the monetary candle at both ends is inflation targeting, or so Gavin explains.