Fed's Williams says moderate inflation overshoot acts as 'guard rail'

📆 10/8/2020 1:20 AM
📰 Reuters

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The Federal Reserve's new pledge to keep interest rates at zero until inflation is on track to 'moderately' exceed 2% has come under fire for being overly vague and leaving too much up to U.S. central bankers' judgment, but that is exactly the point, a key author of the...

FILE PHOTO: John C. Williams, president and CEO of the Federal Reserve Bank of New York speaks to the Economic Club of New York in the Manhattan borough of New York, U.S., March 6, 2019. REUTERS/Lucas Jackson

“Moderate isn’t a number ... it’s a guard rail” against expectations that the Fed would tolerate very high or persistently high inflation, New York Fed President John Williams said at a virtual conference held by the Hoover Institution. “It’s also about proportionality,” he added, adding that if the undershoot on the target has been by a few tenths of a percentage point, the overshoot ought to be balanced against that.

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