Fed’s Bostic: Markets may doubt Fed’s inflation commitment

WASHINGTON (Reuters) – Markets may be losing faith about the Fed’s commitment to meeting its 2 percent inflation target, given years of operating below that threshold, Atlanta Federal Reserve bank president Raphael Bostic said on Friday.

“I am worried that the market may not take us seriously that the 2 percent target has symmetry to it,” meaning that the Fed would be as willing to allow inflation to run above target as to stay below it, Bostic said. “We have been below 2 percent for quite a while.” Maintaining the central bank’s credibility is one argument for changing to a new method of managing the inflation goal, such as shooting for an average over time rather than a single goal.

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