Is the Fed’s Inflation Target Still 2%?
Economists forecast headline PCE to rise 0.3% and core PCE to advance 0.2% for September, translating to annual inflation rates at 2.9% and 2.8%, respectively.
Despite inflation concerns, the Federal Reserve is now widely expected to cut interest rates by a quarter-point due to a sputtering job market.
https://www.marketwatch.com/story/why-investors-see-fridays-inflation-report-as-a-gut-check-of-vibes-on-the-economy-6e0b8cb1
Is the Fed’s Inflation Target Still 2%?
Policymakers could leave their 2% target in place formally, but be all right with never quite getting there.
https://englundmacro.blogspot.com/2025/10/is-feds-inflation-target-still-2.html
There’s a black hole where central banks’ theory of inflation should be. Old assumptions about expectations and targets can no longer be relied upon.
Will the Fed cut interest rates next week? “yes” seems the likely answer, even though inflation exceeds the Fed’s 2 per cent target.
As Mervyn King, the former Bank of England governor, observes, the whole central bank edifice is now resting on increasingly wobbly foundations. “Central banks no longer have a theory of inflation,” he recently told a Harvard seminar.
Central bankers are now akin to shamans, using verbal intervention to shape prices.
Gillian Tett FT 5 December 2025
Mervyn King
https://englundmacro.blogspot.com/2025/07/mervyn-king.html
Kommentarer