Why Yes, the FOMC Would Like Some Inflation Overshoot Now
The Fed claims it has a symmetric two percent inflation target. From its 2017 and 2018 Statements on Longer Run Goals and Monetary Policy , the FOMC states: The Committee reaffirms its judgment that inflation at the rate of 2 percent... is most consistent over the longer run with the Federal Reserve’s statutory mandate. The Committee would be concerned if inflation were running persistently above or below this objective. Communicating this symmetric i nflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored... Numerous Fed officials have repeated this point as well. They too see the inflation target as a symmetric one , an understanding that allows for an occasional inflation overshoot. Despite these claims, however, the Fed has persistently undershoot its inflation target. If one acknowledges the Fed implicitly targeted two percent long before the explicit target was adopted in 2012, then the undershooting has ...
