Opinion
Will the Fed’s New Approach Make Any Difference?
— September 9, 2020

By Mervyn King
By Mervyn King
Bearing in mind that the long-run inflation target hasn’t changed — it remains at 2% — what does this amount to? Is it a damp squib, a substantive pragmatic response to new conditions, or just something to say after a highly publicized review made it necessary to come up with a fresh idea?
The difference between the old approach and the new can certainly be exaggerated. Before this change, most people, if asked whether the Fed was meeting its target of 2% inflation, would have looked at past inflation averaged over some period. In other words, the Fed’s accountability was already cast in terms of average inflation.
Read the full Bloomberg article.
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Lord Mervyn King is the Alan Greenspan Professor of Economics and a professor of Economics and Law, a joint appointment with New York University School of Law.