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Yellen Rejects Idea of Fed Raising 2% Inflation Target

Published 05/19/2022, 01:04 PM
Updated 05/19/2022, 01:36 PM
© Bloomberg. Janet Yellen, US Treasury secretary, during a news conference on the sidelines of the G7 meeting of finance ministers and central bank governors, in Koenigswinter, Germany, on Wednesday, May 18, 2022. Yellen said that it’s understandable the dollar has appreciated amid rising US interest rates, and that these gains have posed a concern for some other countries.

© Bloomberg. Janet Yellen, US Treasury secretary, during a news conference on the sidelines of the G7 meeting of finance ministers and central bank governors, in Koenigswinter, Germany, on Wednesday, May 18, 2022. Yellen said that it’s understandable the dollar has appreciated amid rising US interest rates, and that these gains have posed a concern for some other countries.

(Bloomberg) -- Treasury Secretary Janet Yellen rejected any idea that the Federal Reserve and its counterparts should boost their inflation targets given the importance of stable price expectations at a time when living costs are surging.

“I don’t immediately see that as a reason to change,” the inflation target, Yellen told reporters Thursday in Bonn, Germany, referring to the potential for deglobalization to boost the trend rate of price increases. “The challenge is to meet the inflation targets that have been established.”

US consumer prices have surged by more than an 8% annual rate the past two months, and some economists have questioned whether the Fed will be able to bring gains down to the 2% target for years. That’s in turn spurred speculation the Fed may need to boost its target.

Yellen is in Bonn attending meetings of finance ministers and central bank governors from Group of Seven advanced economies. She said at Thursday’s gathering, a key message among the group was that it will “stand by” Ukraine, with a fresh commitment of support coming.

©2022 Bloomberg L.P.

© Bloomberg. Janet Yellen, US Treasury secretary, during a news conference on the sidelines of the G7 meeting of finance ministers and central bank governors, in Koenigswinter, Germany, on Wednesday, May 18, 2022. Yellen said that it’s understandable the dollar has appreciated amid rising US interest rates, and that these gains have posed a concern for some other countries.

Latest comments

Why not 2.2%? Its really all about CPI to wages. They need to grow in sync.
The fed already said 2% was a soft target and ok to overshoot a year ago, they were still pumping stimulus upto a little over a month ago although many segments of the economy were well over 2% inflation before the start of 2022. They just want to keep the wealthy happy and at the same time fill their own pockets with asset trades in the same markets they manipulate
Why have a target if you move the target when you can't hit it. I can't stand Yellen, but there's a reason we have a 2% inflation target. It's all about keep the economy growing while keeping prices low. We in the real world call it "balance."
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