Fed Is More Willing to Overshoot on Rates: KPMG's Swonk

The transcript discusses the central bank's approach to managing inflation, emphasizing a preference for overshooting rather than undershooting due to improved balance sheets. It highlights lessons from past economic policies, such as the 1960s and 1970s stop-and-go strategies, and the importance of not repeating past mistakes. The discussion also covers future inflation targets, with a focus on maintaining a 2% goal and the potential for adjustments once inflation is under control.

Why are policymakers more inclined to risk overshooting in their economic strategies?

• Because balance sheets have deteriorated.

• To avoid reversing progress on inflation.

• To stimulate the economy excessively.

• Due to a lack of historical data.

What historical periods are policymakers trying to avoid repeating mistakes from?

• The 2000s and 2010s

• The 1960s and 1970s

• The 1980s and 1990s

• The 1950s and 1960s

What is the current inflation target that policymakers are committed to achieving?

• 1%

• 4%

• 2%

• 3%

When might policymakers consider adjusting the inflation target?

• Once inflation exceeds 3%.

• Before inflation reaches 2%.

• After the current inflation battle is won.

• Immediately, due to current economic conditions.

What is the main reason for not moving the inflation target during a crisis?

• To maintain credibility and focus.

• To quickly adapt to changing conditions.

• To increase economic growth.

• To reduce interest rates.