The Federal Reserve updated its monetary policy framework on Thursday to better guide the US inflation rate, reach maximum employment, and pad against future economic downturns.
The Fed will now target an inflation rate that averages 2% over time, differing from the previous goal of maintaining inflation at 2%, Powell said during the Fed's annual Jackson Hole, WyomingThe new strategy marks a significant change from the central bank's previous target, and signals the Fed will actively combat inflation that runs too low, as opposed to previous concerns of prices increasing too quickly.
The US inflation rate trended below the Fed's 2% goal for several quarters as the unemployment rate sat at historic lows. The central bank's new framework means policymakers will allow inflation to trend above 2% for some time to balance out periods of weaker price growth. Thursday announcement comes nearly two years after the Fed announced it would comprehensively review its monetary policy strategy. The central bank conducted several town hall-type events to judge how monetary policy was affecting workers and business owners. The framework updates account for goals established before the pandemic and for those that abruptly emerged in the coronavirus's wake, Powell said.
fed chairman to allow inflation to keep trump from tweeting at him all mean, lol
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