Type of Content
Approved Story
1
Format
Region
News Item Format
Standard
Autocurated
0
The Federal Reserve’s definition of its inflation target suggests it should aim to drive the inflation rate below 2% for the next several years.
Central bank officials, though, have avoided entertaining any such possibility. Given the disconnect, experts suggest, the Fed should clarify its target to forestall any confusion by explaining it won’t aim for very low inflation in the years to come.
The problem is that the Federal Open Market Committee, the body that sets monetary policy, says in its statement of longer-run goals that it “seeks to achieve inflation that averages 2 percent over time.” The committee last updated and affirmed the statement in January.
Inflation has been, and is still, running well above 2%. It has averaged about 3.5% over the past year and was only slightly less than that over the past five years, according to the personal consumption expenditures price index, which is the gauge favored by the Fed.