, Columnist
Low CPI Could Alter Fed's Balance-Sheet Plans
Inflation data for June casts doubt on the central bank's ability to meet its 2 percent goal.
Fed Chair Janet Yellen before the House panel.
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Fed Chair Janet Yellen’s statement to Congress this week hit all the high notes: an improved labor market, low inflation, expectations of gradual federal funds rate increases and a plan to reduce the size of the balance sheet.
Missing from Yellen’s remarks was the recognition that Fed policy will depend greatly on promised fiscal policy stimulus coming to fruition. Without at least some tax cuts and some additional spending, inflation is likely to remain relatively low, keeping the Fed on a path of slowly raising interest rates.