Fed's Williams Lays Out Case for Considering Price Level Target
- San Francisco Fed chief says potential output is hard to gauge
- It ‘pays to avoid overreliance on these estimates,’ he says
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In a world where the underlying growth potential of the economy is hard to pin down, targeting a price level -- rather than a precise, 2 percent inflation goal -- could be effective, Federal Reserve Bank of San Francisco President John Williams argues in new research.
Writing in an essay published Monday, Williams says officials don’t know how fast the economy is capable of growing.