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NY Fed's Williams says flexible inflation targeting not based on a formula

Published 09/29/2020, 03:23 PM
Updated 09/29/2020, 03:25 PM
© Reuters.

(Reuters) - The Federal Reserve will need to purposely overshoot on its 2% inflation target temporarily to make up for periods when inflation is lower than desired, and it will need to be flexible in its approach, New York Federal Reserve Bank President John Williams (NYSE:WMB) said on Tuesday.

"We need to make sure that we’re purposely overshooting that moderately for some time to get that balance," Williams told reporters. "To me, success is not some arithmetic or some formula but it’s really this notion of inflation expectations, how people think about what’s inflation going to be in the future."

 

Latest comments

why is there a need to compensate ? if the economy and employment have done good with low inflation? only reason is to erase peoples savings and to lower national debt relative to product. actually I have not found any reasoning, why 2% inflation is the best for economy, and not e.g. 0,5%.
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