Redistributional Effects of Monetary Policy

Inflation targeting is not a neutral pareto improvement.  Any choice of target
redistributes from some groups to others - making some worse off.
For example, high inflation harms holders of fixed rate debt - including
pensioneers, holders of fixed income securities, employees with protected
jobs and annuity-like compensation (including most government employees,
and policy makers, and most tenured academics), and creditors.  It benefits
net debtors - particularly if they have fixed rate debt or debt with interest
rate caps.  It also benefits owners of commodities, real estate, foreign currencies,
equity in export oriented firms, local employees in trade sensitive and
offshoring-capable sectors, and the unemployed.  Low inflation benefits
holders of fixed rate debt, business that export to the target country,
importers, employees who gain from offshoring, retired people on fixed pensions
and people with protected annuity like wages (academics, government employees,
and policy makers).  Low inflation therefore tends to favor rentiers -
increasing their wealth by boosting the purchasing power of their assets,
and transfers wealth away from debtors, owners of real estate,
owners of commodities, local import sensitive businesses, and the insecurely employed.

In theory, this could be corrected - restoring its neutrality (and Pareto improvement),
however transaction costs, moral hazard, information asymmetry and political 
resistance would make such wealth transfers grossly impractical.

To the extent that Monetary policy creates a known and predictable transfer
of wealth between a priori known counterparties, it is not a neutral economic tool 
and cannot be divorced from political considerations and preferred constituencies.

Furthermore, such constituencies will try to influence choice of monetary policy
targets - rentiers/creditors and pensioners will prefer tight monetary policy, 
debtors will prefer looser monetary policy, as will exporters and other participants
in (internationally)tradeable sectors of the economy, owners of commodities  
and real estate, and the precariously employed

If redistribution of wealth via such mechanisms has differential efficiency
impact and impacts the network of business formation and production within
and between trading nations, some monetary policy targets may also move
an economy away from an efficient frontier.

Moral Hazard of Monetary Policy Making Agents 

From a principal agent perspective, monetary policy makers face 
a personal moral hazard - since their compensation typically takes the
form of a secure fixed annuity.  This would incentivize them to favor
tight monetary policy - even at the expense of lower real GDP growth.
Compensation schemes that made their personal wealth inversely related
to the unemployment rate would create a moral hazard in favor of overly
loose monetary policy.  Compensation schemes that made their personal wealth 
contingent on real GDP growth may be more efficient by reducing their
overall moral hazard.