This US survey examines (a) If the Fed changed its inflation target from 2% to 3%, the long-run costs of inflation for households would be essentially unchanged; (b) The Fed’s revised strategy announced in 2020 - focusing on employment shortfalls and with a more flexible interpretation of the inflation target - has made little practical difference to monetary policy outcomes in the past five years
Keyword: inflation target
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This week's European Economic Experts Panel statements:
A) The ECB should aim to achieve an inflation rate that averages 2% over time.
B) The ECB should take account of the environmental implications of its policy decisions.
C) The objectives set for the ECB by Treaty should make maximum sustainable employment of equal importance as price stability.
This week's US Economic Experts Panel statement:
The Fed's revised strategy to focus on employment shortfalls and a more flexible interpretation of the inflation target will make little practical difference to monetary policy outcomes over the next decade.
This week's IGM Economic Experts Panel statements:
A) If the Fed changed its inflation target from 2% to 4%, the long-run costs of inflation for households would be essentially unchanged.
B) Raising the inflation target to 4% would make it possible for the Fed to lower rates by a greater amount in a future recession.
This week's IGM Economic Experts Panel statements:
A) The Fed should raise its target interest rate when it meets in mid-December.
B) The Fed should have raised interest rates sooner, rather than leaving them near zero for this long.
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