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Fed Close to Making Its New Inflation Strategy Official

  • Review has produced a more relaxed view on crossing 2% goal
  • More radical options rejected after year-plus listening tour
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.
Photographer: Andrew Harrer/Bloomberg

The Federal Reserve will soon reveal a subtle yet profound shift in how it conducts monetary policy for the world’s largest economy, officially embracing a more relaxed view on inflation.

In addition to helping rescue the U.S. economy amid the coronavirus pandemic, Fed Chair Jerome Powell and colleagues also spent 2020 finishing up the central bank’s first-ever review of how it pursues the goals of maximum employment and price stability set for it by Congress. It’s a process that began in early 2019 and included a nationwide listening tour.