Posted by James Ong, Director, Derivative Portfolio Management on May 9, 2019, in Fixed Income
Taken together, the recent combination of testimony, press releases, and other communications suggest that the US Federal Reserve (Fed) may be considering a shift to average inflation targeting. If true, this could mean the Fed would move away from trying to engineer a sustained, specific inflation level and would be free to allow above-target inflation for a period before using rate hikes to slow the economy. Such a shift could certainly change how the Fed reacts to new economic and