There is debate (mainly among those familiar with monetary policy issues) about the wisdom of keeping or changing the 2 percent inflation target. This is likely to be a continuing conversation that’ll continue under the new Fed chair. Much of the discussion is from advocates of one or another alternative making their pitch.
On January 8, the Hutchins Center on Fiscal and Monetary Policy at Brookings will bring advocates of several alternatives (including sticking with 2% target) together to present their case and to challenge the others. The discussants will weigh whether and how the choice of a target might matter for to the actual policy path and the results for the economy. Important aspects of this discussion will be the effects of alternatives on the clarity of Fed communication and on setting expectations and on the process by which the legislature holds the Fed accountable for results. The debate will be grounded in serious analysis, clarify some issues, create a baseline for what’s likely to be a continuing conversation and consider a process by which the Fed can address this important question.
A light reception will follow the event.