Central Banks

Feds Bullard: would take a decade of above target 2.5% inflation to make up for the 5 years of shortfall

Fed dove speaking in St. Louis

He adds:

  • US economy around 4.6% below where it would be in nominal terms if Fed had met its inflation target in recent years
  • shift from current inflation target to level – targeting approach would take a lot of planning, but could be considered a more optimal approach under some models
  • short of a formal shift in framework, policymakers could lean toward allowing inflation above target in order to make up for past shortfalls
  • Fed inflation target doesn’t do anything about misses

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