Part 6/7:
The dialogue also touched on the Fed's inflation target, specifically the 2% goal. The former Vice Chairman articulated a vision for a more flexible approach to inflation, suggesting that the Fed should consider discussing a range to assess inflation rather than a strict target. He acknowledged the credibility concerns that accompany any shift from the established target, arguing that the transition to a range-based approach could be perceived as a loss of commitment to previously stated goals.
This issue extends beyond individual leaders like Jerome Powell; it reflects an institutional challenge. The adherence to a 2% target, though baked into policy over time, may become increasingly complex to manage if actual rates deviate from this benchmark.