Price level targeting and the delegation issue in an open economy

•REX inflation is domestic inflation purged of the effects of the real exchange rate.•REX price level objective allows delegation mechanism to work in an open economy.•The delegation mechanism does not work for a domestic price level or CPI objective.

A weight-conservative central banker setting policy with discretion and stabilizing the real exchange-rate-adjusted (REX) price level and the output gap can replicate the behavior of the rate of REX inflation and the output gap under policy from a timeless perspective.