All of the argument about
appropriate inflation targeting in recent years has focused not on whether 2 percent is too high but on whether it is too low a target.
Not exact matches
The Fed statement said: «The Committee anticipates that it will be
appropriate to raise the
target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that
inflation will move back to its 2 percent objective over the medium term.»
One can reasonably argue that after years of below
target inflation, it is
appropriate to have a period of above
target inflation.
This means that if a two percent
inflation target reflected a proper balance when it first came into vogue decades ago, a higher
target is probably
appropriate today.
To be more specific, as
inflation approaches the Federal Reserve's 2 percent
target and unemployment remains below what we see as a sustainable rate, it is
appropriate for the Fed to continue to remove monetary accommodation by gradually raising interest rates.
In our March statement we indicated that our current monetary policy stance remained
appropriate to achieve our 2 per cent
inflation target on a sustainable basis by around the middle of 2018, whereas US authorities have now begun to tighten.
The Governor and the Treasurer have agreed that the
appropriate target for monetary policy is to achieve an
inflation rate of 2 — 3 per cent, on average, over time.
If the Fed believed that a 2 percent
inflation target was
appropriate at the beginning of 2012 when it believed the neutral real rate was above 2 percent, I can not see any argument for not adjusting the
target or altering the framework when the neutral real rate is very plausibly close to zero.
(iii) If a two percent
inflation target was
appropriate when the neutral real rate was thought to be two percent and stable, surely a higher
target is
appropriate when the neutral real rate is zero and unstable.
Imagine a world in which all countries of significance had been following a medium - term, flexible
target for CPI
inflation, coupled with
appropriate exchange rate settings.
«In determining whether it will be
appropriate to raise the
target range at its next meeting, the committee will assess progress - both realized and expected - toward its objectives of maximum employment and 2 percent
inflation,» the Fed said in a statement after its latest two - day policy meeting.
Building on continued progress in improving the effectiveness of its
inflation targeting framework, BOG remains committed to maintaining an
appropriate monetary policy stance to bring
inflation down toward its medium - term objective.
Voting against the action were Richard W. Fisher, who believed that, while the Committee should be patient in beginning to normalize monetary policy, improvement in the U.S. economic performance since October has moved forward, further than the majority of the Committee envisions, the date when it will likely be
appropriate to increase the federal funds rate; Narayana Kocherlakota, who believed that the Committee's decision, in the context of ongoing low
inflation and falling market - based measures of longer - term
inflation expectations, created undue downside risk to the credibility of the 2 percent
inflation target; and Charles I. Plosser, who believed that the statement should not stress the importance of the passage of time as a key element of its forward guidance and, given the improvement in economic conditions, should not emphasize the consistency of the current forward guidance with previous statements.
The Committee sees this guidance as consistent with its previous statement that it likely will be
appropriate to maintain the 0 to 1/4 percent
target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected
inflation continues to run below the Committee's 2 percent longer - run goal, and provided that longer - term
inflation expectations remain well anchored.
The Committee now anticipates, based on its assessment of these factors, that it likely will be
appropriate to maintain the current
target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected
inflation continues to run below the Committee's 2 percent longer - run goal.
The Committee continues to anticipate, based on its assessment of these factors, that it likely will be
appropriate to maintain the current
target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected
inflation continues to run below the Committee's 2 percent longer - run goal.
In particular, the Committee decided to keep the
target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be
appropriate at least as long as the unemployment rate remains above 6-1/2 percent,
inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer - run goal, and longer - term
inflation expectations continue to be well anchored.
The Committee continues to anticipate, based on its assessment of these factors, that it likely will be
appropriate to maintain the current
target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected
inflation continues to run below the Committee's 2 percent longer - run goal, and provided that longer - term
inflation expectations remain well anchored.