Fed feeling its way with new inflation framework


In January 2012, the US Federal Reserve’s historic shift to adopt a 2% inflation target brought the central bank in line with many of the world’s major economies’ monetary policy frameworks. But last week, on August 27, the Federal Open Market Committee (FOMC) unanimously voted to diverge from other central banks by adopting a form of average inflation targeting.

The Fed will now aim to achieve average inflation of 2% over time. It will allow inflation to moderately overshoot the 2% target for

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