Fed mulls raising inflation target
Yellen responds to economist’s urging to reexamine objective
In her press conference last week Fed chair Janet Yellen signaled policy makers will consider the issue of raising the 2% inflation target saying “we very much look forward to seeing research by economists that will help inform our future decisions on this.”
The comments came after group of 22 economists urged Yellen earlier this month to appoint a commission to consider raising the inflation objective.
The question has been subject of extensive debate among central banks, with advocates warning that keeping low interest rates during times of full employment does not allow scope to cut rates in during recessions.
There is concern, though, that wages may not rise with inflation, a phenomena which would simply lead to lower living standards.