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Fed's Williams says moderate inflation overshoot acts as guardrail

Published 10/07/2020, 04:14 PM
Updated 10/07/2020, 04:15 PM
© Reuters. John C. Williams, president and CEO of the Federal Reserve Bank of New York speaks to the Economic Club of New York in the Manhattan borough of New York

(Reuters) - The Federal Reserve's new pledge to keep interest rates at zero until inflation is on track to "moderately" exceed 2% has come under fire for being overly vague and leaving too much up to U.S. central bankers' judgment, but that's exactly the point, a key author of the pledge said on Wednesday.

"Moderate isn't a number...it's a guardrail" against expectations that the Fed would tolerate very high or persistently high inflation, New York Fed President John Williams (NYSE:WMB) said at a virtual conference held by the Hoover Institution. "It's also about proportionality; if we are undershooting the target by a few tenths... then you are obviously thinking that that's the proportionality that you are thinking about in terms of trying to get that balance of 2%, but it is specific to the circumstances," and where the economy is.

Latest comments

US is seeming more like Spanish Empire in the 16th century. The flood of cheap silver to the Spain matches in some way the dollar printing to the US today. For more information, the book No One Can Escape the 4 Laws
How close are we to having a completely worthless $?
Fed want very high inflation. If not, government will be like Greece. It is temporary and will lead to the same point. Either the value of usd collapse(imported inflation) or the gov. cannot pay the int. of debt.The politics took over the Fed and this will lead to the situation of Germany in the 30th. Numbers stay numbers and lead to same result.
Weimar?
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