Smart fiscal policy could help the US Fed do its job properly
Safeguard the central bank from cognitive dissonance on inflation
Federal Reserve Chair Jerome Powell briskly dispensed with the idea of raising the central bank’s inflation target in his recent speech at Jackson Hole. But the idea isn’t going away. It has influential supporters, and they make a strong case. What’s more, the US central bank could raise the 2% target tacitly while insisting it has done no such thing. This might be the likeliest outcome.