Fed adopts average inflation target
The Federal Reserve has adopted an average inflation target, chairman Jerome Powell announced today (August 27), making it the first major central bank to do so.
The Fed’s new framework will aim to achieve average inflation of 2% “over time”, Powell told the Kansas City Fed’s Jackson Hole conference. It will now allow inflation to “moderately overshoot” the 2% target for “some time” after periods where inflation has been below target.
The new regime is the central change resulting from the Fed
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