Fed faces longer-term challenges under new policy strategy

This August, the Federal Reserve announced two key adjustments to its monetary policy strategy. First, instead of its previous strategy of “letting bygones be bygones,” it would seek “to achieve inflation that averages 2% over time, and therefore judges that, following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time”. Second, unlike in the past, when the Fed sought to respond to