Worried that current low inflation expectations will sap the U.S. central bank&#...
SANTA BARBARA, Calif./WASHINGTON - Worried that current low inflation expectations will sap the U.S. central bank’s ability to combat a future downturn, two Federal Reserve officials on Thursday made an unusual pitch: if inflation rises unexpectedly, the Fed should lay out the welcome mat.
Speaking in Washington, Fed Governor Lael Brainard floated a similar approach, telling members of the National Tax Association that if prices rise, because of higher import costs, for example, the Fed could take advantage of the situation by encouraging an “opportunistic reflation,” and “communicate that a mild overshooting of inflation is consistent with our goal.”
The remarks on Thursday from Brainard and Kashkari signal an appetite for the Fed to remain unmoved, possibly for years, in the face of upward price increases.
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