The Federal Reserve is willing to allow inflation to exceed its target in exchange for lower unemployment, Guggenheim Partners Chief Investment Officer Scott Minerd said Wednesday.
Minerd asserted the Fed's 2-percent inflation target is an average, not a ceiling. "We could have an overshoot to 3 percent or so, and I think they would welcome it," he told CNBC's "Squawk on the Street."
Members of the Fed's policymaking committee last week indicated they expect to raise rates twice this year. At the December meeting, they suggested they would hike four times. The revision brought Fed expectations for interest rates closer to Wall Street's outlook.
"The Fed is clearly in the process of falling behind the curve," Minerd said. "I think that the old trade-off between inflation and unemployment is something that a lot of the members of the committee are willing to live with."