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Dear Fed, Have We Made Up for Lack of Prior Inflation Yet?
The Federal Reserve’s inflation target is 2 percent over the longer run, measured by the annual change in the Personal Consumption Expenditures (PCE) price index. This target is considered consistent with the Fed’s mandate for maximum employment and price stability. The Fed uses a Flexible Average Inflation Targeting (FAIT) framework, which allows inflation to temporarily deviate from the 2% target as long as it averages 2% over time. Temporary Deviation: Inflation as measured by 4 indexes has been above target since April of 2021, a mere 53 consecutive months (54 months for its preferred measure, core PCE). ... (full story)