Bullard Says Fed Will Try to Make Up for Past Inflation Misses

The video explains the Federal Reserve's new policy framework, which aims to allow inflation to rise moderately above 2% for some time to make up for past shortfalls. This approach is intended to cement market expectations at a 2% inflation target. The policy is compared to nominal GDP and price level targeting, highlighting its practical application. The decision to unveil this at Jackson Hall was strategic, providing a platform for a major speech and community consensus.

Why was the announcement of the Fed's new framework policy delayed?

• Due to a change in leadership

• Technical issues with the announcement

• Because of the pandemic

• Lack of consensus among committee members

What is the main goal of the Fed's new policy regarding inflation?

• To keep inflation below 2%

• To achieve inflation moderately above 2% for some time

• To eliminate inflation entirely

• To maintain a fixed inflation rate

What is the reason for allowing inflation to be above the target according to the new policy?

• To make up for past misses to the low side

• To increase government revenue

• To stabilize the stock market

• To decrease unemployment

Which targeting strategy is mentioned as being close to the new policy?

• Unemployment rate targeting

• Interest rate targeting

• Nominal GDP targeting

• Exchange rate targeting

What is the role of the committee in the new framework policy?

• To eliminate inflation

• To make judgments about inflation targets

• To control the stock market

• To set a fixed inflation rate