Economics
Fed Officials Talk Up New Approach to Meeting Inflation Goal
- Average inflation targeting would accept minor overshoot of 2%
- Debate coming as prices slip below goal amid low unemployment
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Two Federal Reserve officials highlighted the benefits of an approach to monetary policy called average inflation targeting, which would entail accepting overshoots of the central bank’s 2 percent price goal to make up for times when inflation was too low.
San Francisco Fed President Mary Daly and John Williams, who preceded her in that role before shifting to run the New York Fed last year, both mentioned the tactic during presentations at a conference in New York sponsored by the University of Chicago’s Booth School of Business. The event is previewing themes that will dominate a year-long review of the Fed’s policy framework that kicks off in Dallas on Monday.