US Economics

US Economics Focus

18 January, 2018

Will the Fed abandon inflation targeting?

In the long run we suspect the Fed will move away from rules-based inflation targeting and shift to a more discretionary regime that focuses on financial stability as well as price stability and full employment. In the short run, however, the Fed’s initial reaction will be to try to salvage inflation targeting by switching to a broader target range, probably along the lines of the 1.5% to 3.0% suggestion recently put forward by one Fed official.

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