Finance

Convincing the markets it can do what it says it will do

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Now that Federal Reserve officials have sent a clear message on their desire for higher inflation, the tough part is convincing the world that they can pull it off.

For the past decade, the Fed has struggled to get inflation up to the 2% target it sees as consistent with a growing economy and that provides policymakers with enough policy room for times of economic stress.

In a historic shift Thursday, Chairman Jerome Powell announced that policymakers would allow inflation to run modestly higher for periods of time, rather than employ the past practice of using preemptive rate hikes to control price pressures. The new practice is known as “average inflation targeting.”

While markets rallied…



Source cnbc.com

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