2024-05-18 09:51:12 ET
Summary
- The Fed has a 2% inflation goal for the US economy, but the meaning of this long-term goal is unclear.
- The long-term average for inflation is actually slightly above 3%, contradicting the Fed's 2% goal.
- Only a small minority of people are aware of the higher long-term average for inflation.
- The present natural tendency of inflation is probably 3% or so and the Fed will find it difficult to reach a sustainable 2%.
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How Did The Fed Come Up With That 2% Inflation Target? Consider The Facts