Fed’s Rosengren Says Central Bank Should Target an Inflation Range
The comments by Eric Rosengren, president of the Boston Fed, echoed remarks made earlier in the day by another Fed policymaker who cited the U.S. economy’s falling a bit short on the central bank’s inflation target as a problem. The Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, is currently at 1.8%.
Rosengren said he supports an approach that would see the Fed, which is “forced to accept” inflation below its 2% target during recessions, commit to achieve above-2% inflation “in good times.” Policymakers, for instance, could target a range of 1.5-2.5%.
“My own preference would be an inflation range,” because hitting the current target will only get harder with rates as low as they are, Rosengren said at Davidson College in North Carolina. “Even though we’re only missing by a little bit it actually does matter if you miss by a little bit on a regular basis.”