New FOMC target may be shifting expectations – research

inflation

A new paper published by the Cleveland Fed argues that the Federal Open Market Committee’s (FOMC) new inflation target may be starting to move inflation expectations slightly higher.

The paper, “Flexible average inflation targeting and inflation expectations: a look at the reaction by professional forecasters”, found that some analysts predicted slightly higher inflation after the new target’s introduction.

The FOMC first set a precise inflation target of 2% in January 2012. In August 2020

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