Fed Announces Shift in Inflation Policy
08/27/2020
It was widely expected (and generally thought to be the case anyway), but this morning at the annual Jackson Hole Economic Policy Symposium, Fed Chairman Powell made it official: The Fed will allow inflation to move moderately above its 2% target “for some time.” Historically, the Fed has hiked the overnight funds rate when core inflation threatened to rise above its 2% target. It’s been more than 12 years since core Personal Consumption Expenditures (PCE) has been above +2.1% on a year-over-year basis, and 28 years since it climbed above +3.0%.
