Inflation Thresholds
Stephen Stanley, chief economist at Amherst Pierpont Securities, said the framework review nudged policy makers into favoring forward guidance that incorporates inflation goals instead of unemployment goals, or a combination.
“Putting more emphasis on the inflation number is a function of some of the changes they’ve come around to that, in turn, were mainly related to how they view how the structure of the economy has changed,” he said.
What the minutes do not reveal is whether the Fed is likely to keep fastened to zero until inflation overshoots 2%, or simply keep rates below what they judge to be a neutral setting until that point.
JPMorgan’s Feroli expects they’ll stay at zero.
“It would be an aggressive step, but probably one that’s warranted if you believe the logic behind inflation averaging,” he said.
This article was provided by Bloomberg News.