The U.S. Federal Reserve should focus less on the short-term outlook for inflation and look to policies that bring inflation back up to its 2-percent target over the long term, a top Fed official said on Thursday.
"A policy that takes a longer-term perspective and is properly communicated and executed—so as to instill confidence that monetary policy will hew to a 2 percent inflation target rather than fixate on the run-rate of the past four quarters or the outlook for the next four—may better supply the longer-term comfort that households and businesses need to plan and budget," Dallas Fed President Richard Fisher told a conference on uncertainty at the bank.
The comments left it unclear exactly what Fisher, one of the Fed's most hawkish policymakers, wants the central bank to do differently in the face of persistently low inflation and low growth. Those economic conditions mean that Americans now have much lower income than they might have expected just five years ago, he said.
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A longer view on inflation targeting "would reduce the uncertainty that monetary policy as it is currently conducted spawns and would be more effective in doing its part to assist in economic expansion," he said in the text of remarks to a conference at the Dallas Fed on uncertainty.