Is the Fed’s Inflation Target Still 2%?

 

The Federal Reserve’s policymakers ought to ask why, with inflation stuck at 3%, investors have so confidently priced in at least two further interest-rate cuts starting today.

Core PCE inflation (the central bank’s preferred measure) fell to 3.1% at the end of 2023. 

Two years later, it’s still roughly 3%. 

Fed says the long-term real interest rate is 1%. 

With inflation at 3%, that suggests a neutral policy rate of 4%, which is about where it stands. 

Powell and his colleagues constantly affirm their commitment to the 2% goal. And it says a lot for their standing that they are still mostly believed, in financial markets at least.

If, despite everything, cuts were already a done deal, one can’t help but wonder what became of 2% inflation.

Clive Crook  Boomberg October 29, 2025

https://www.bloomberg.com/opinion/articles/2025-10-29/is-the-fed-s-inflation-target-still-2

How Interest Rates Have Changed 

https://www.wsj.com/livecoverage/fed-interest-rate-decision-live-10-29-2025/card/how-interest-rates-have-changed-over-the-past-several-years-VQdzWLmjY1i55gpbezdN

Inflationsmålet överges i tysthet.

Policymakers could leave their 2% target in place formally, but be all right with never quite getting there.

And then some years down the line, they could adopt a higher target.

https://englundmacro.blogspot.com/2025/10/inflationsmalet-overges-i-tysthet.html

we intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective.”

https://englundmacro.blogspot.com/2023/09/powells-main-hawkish-line-was-to-say.html