Fed's Williams says moderate inflation overshoot acts as guardrail
Reuters
Published Oct 07, 2020 04:14PM ET
(Reuters) - The Federal Reserve's new pledge to keep interest rates at zero until inflation is on track to "moderately" exceed 2% has come under fire for being overly vague and leaving too much up to U.S. central bankers' judgment, but that's exactly the point, a key author of the pledge said on Wednesday.
"Moderate isn't a number...it's a guardrail" against expectations that the Fed would tolerate very high or persistently high inflation, New York Fed President John Williams (NYSE:WMB) said at a virtual conference held by the Hoover Institution. "It's also about proportionality; if we are undershooting the target by a few tenths... then you are obviously thinking that that's the proportionality that you are thinking about in terms of trying to get that balance of 2%, but it is specific to the circumstances," and where the economy is.
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Written By: Reuters
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