January 24, 2011 Reading Time: < 1 minute

“Federal Reserve officials last year, prodded by Chairman Ben Bernanke, seriously considered adopting an explicit target for inflation of 2%, but Mr. Bernanke failed to forge a consensus and backed away. The issue could resurface in 2011.

The Fed informally has said its goal is inflation of around 2%. But after years of internal debate on the subject, it hasn’t adopted an official target.

Proponents say adopting a formal objective would blunt criticism of the Fed that current easy-money policies could lead to an upward spiral in consumer prices and could reinforce the Fed’s commitment to avoiding deflation, or falling prices. Skeptics, however, wonder if an inflation target is needed and worry it could distract the Fed from its congressionally set mandate of maximum employment.” Read more.

“New Push at Fed to Set an Official Inflation Goal”
Jon Hilsenrath
Wall Street Journal, January 24, 2011.

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