The Fed’s Inflation Target
By Randall Holcombe • Wednesday January 25, 2012 12:14 PM PDT • 5 Comments
The Federal Reserve has announced what appear to be inconsistent policy targets for the upcoming year. The Fed says they want to keep interest rates low at least through 2013, meaning a continuation of easy money policy, and has also announced that their inflation target is 2%.
The inflation rate for 2011 was 3.2%. A continuation of easy money policy through low interest rates should increase inflation, especially if the economy continues to recover. The Fed’s idea that they can both maintain artificially low interest rates and reduce inflation seems inconsistent. I’m expecting inflation in 2012 to be higher than it was in 2011, even though the Fed’s target is lower.
Tags: Economics, Federal Reserve, Inflation, Money and Banking 
Seems like the PM market is not taking any chances!
DW | Jan 25, 2012 | Reply
Inflation rate is undefined, they hope.
richard | Jan 26, 2012 | Reply
Just keep on “cooking” those economic equations, fellas. The NY Times and MSNBC has to tell us something – and it’s best something we want to hear.
Joe Kramer | Feb 1, 2012 | Reply