Near-term impact of San Francisco Fed’s Williams push for higher inflation target in the future
by Greg Robb
WASHINGTON (MarketWatch)—San Francisco Fed President John Williams said earlier this week he was open to raising the U.S. central bank’s inflation target if the economy runs into trouble.
For Fed watchers more interested in today than the distant future, that translates into Williams being more open to letting inflation overshoot the target and keeping rates lower for longer.
“If a higher inflation target may eventually be appropriate, overshooting the current target might be considered less costly as well,” said Zach Pandl, an economist at Goldman Sachs, in a note to clients.