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The Fed: Powell opposes idea of raising 2% inflation target to 4%, saying he doubts it would be credible

Bloomberg News
Federal Reserve Chairman Jerome Powell says central banks are having a hard enough time getting inflation to 2%.

Federal Reserve Chairman Jerome Powell on Wednesday rejected advice from some of the world’s most prominent economists and said he would not support moving the central bank’s 2% inflation target up to 4%.

An academic paper presented at Fed’s conference earlier this month about its long-run strategy said a higher inflation target would have speeded up the recovery of the economy from the Great Recession.

“Our conclusion that the tools in the current monetary policy framework would have been more effective over the past decade had the Fed inherited a higher inflation target raises the question of how the Fed might reach a higher inflation target,” said the paper coauthored by Janice Eberly of Northwestern University, James Stock of Harvard University and Jonathan Wright of Johns Hopkins University.

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