15 December 2022 | Other

Powell: Fed won't change 2% inflation target

Powell spoke at a press conference following a meeting of the Federal Open Market Committee. Throughout the gathering, officials raised their overnight target rate by half a percentage point. During his interview, Powell was asked whether the Fed could consider raising its inflation target.

Answering the question, the economist said that the Federal Reserve will not change the inflation target. According to him, the US Central Bank will keep this figure at 2%. He also added that the bank is going to use various tools to bring inflation back to 2%.

The Federal Reserve adopted a 2% inflation target back in 2012 amid a push from other major central banks. Such a decision is explained by the fact that this target helps to define price stability, which the Fed is legally mandated to achieve. Officials say 2% is a sweet spot. Any decline or price pressure could cause it to fall into negative territory, also known as deflation. This, in turn, can harm the economy.



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