The changes were codified in a policy blueprint called the Statement on Longer-Run Goals and Monetary Policy Strategy, first adopted in 2012, that has informed the Fed’s approach to interest rates and general economic growth. Central bank officials traditionally have believed that low unemployment leads to dangerously higher levels of inflation, and they’ve moved preemptively to head it off. “Many find it counterintuitive that the Fed would want to push up inflation,” Powell said in prepared remarks. In addition to the shift on inflation, the Fed also announced a policy tweak that changes the approach to employment. Powell said the Fed remains of the belief that 2 percent inflation is still the proper target over time.

Source: The Standard August 27, 2020 13:07 UTC