Fed should 'communicate comfort' with slightly higher inflation: Evans

NEW YORK (Reuters) – The U.S. Federal Reserve should be willing to embrace inflation above 2 percent half the time and communicate that preference with the public to avoid missing its current target, a top policymaker at the central bank said on Monday.

“While policy has been successful in achieving our maximum employment mandate, it has been less successful with regard to our inflation objective,” Federal Reserve Bank of Chicago President Charles Evans said in remarks prepared for delivery in New York.

“To fix this problem, I think the Fed must be willing to embrace inflation modestly above 2 percent 50 percent of the time. Indeed, I would communicate comfort with core inflation rates of 2-1/2 percent, as long as there is no obvious upward momentum and the path back toward 2 percent can be well managed.”

Source: Read Full Article