Fed's Williams says moderate inflation overshoot acts as guardrail

  • 10/7/2020
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Oct 7 (Reuters) - The Federal Reserve’s new pledge to keep interest rates at zero until inflation is on track to “moderately” exceed 2% has come under fire for being overly vague and leaving too much up to U.S. central bankers’ judgment, but that’s exactly the point, a key author of the pledge said on Wednesday. “Moderate isn’t a number...it’s a guardrail” against expectations that the Fed would tolerate very high or persistently high inflation, New York Fed President John Williams said at a virtual conference held by the Hoover Institution. “It’s also about proportionality; if we are undershooting the target by a few tenths... then you are obviously thinking that that’s the proportionality that you are thinking about in terms of trying to get that balance of 2%, but it is specific to the circumstances,” and where the economy is. (Reporting by Ann Saphir; Editing by Leslie Adler)

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