Some Fed presidents want higher inflation targets. About 84% of economists think the Fed should stick with a 2% target.
The Wall Street Journal reports Economists, by Wide Margin, Support 2% Inflation Target.
Federal Reserve officials in recent months have floated ways they might alter the central bank’s 2% inflation goal. But economists surveyed by The Wall Street Journal have a message for the Fed: Don’t touch that target.
About 84% of economists said the Fed should stick with its current target, in large part to avoid damaging the central bank’s credibility.
“Changing the rules could trigger skepticism and uncertainty,” said Lynn Reaser, an economist at Point Loma Nazarene University in San Diego.
The Fed adopted the 2% target in 2012. Now, some officials, including former Chairman Ben Bernanke, say the central bank should examine alternatives that would better help the economy recover from recessions in an era of persistently lower inflation and interest rates.
Inflation has undershot the target for all but two months in the past five years.
That suggests officials would have an even harder time hitting their mark if they raised the target or if they sought to let inflation run high for a time to make up for weak inflation periods.
“It’s like moving the goal post when you can’t put the ball in the net,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
Just 11% of economists surveyed supported moving to a price-level target and 5% were in favor of raising the inflation target.
Survey Results
Correct Answer
Not one economist came up with the correct answer.
There should not be a target at all because there is no economic benefit to inflation.
By now it should be clear that the inflation target has blown major consecutive bubbles.
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