Fed’s Evans Would Be ‘Quite Pleased’ With 2.5% Core Inflation

The transcript discusses the importance of not being timid in achieving inflation above 2%. It emphasizes the need to overshoot this target to maintain credibility and achieve dual mandate objectives. The speaker suggests that reaching 2.5% inflation would indicate economic balance and accommodation. The Evans rule and forward guidance are mentioned as effective strategies, with a focus on keeping interest rates low until inflation confidently exceeds 2%. The discussion concludes with the importance of strong communication to meet objectives and avoid preemptive actions.

Why does the speaker believe it is important to overshoot the 2% inflation target?

• To maintain credibility and achieve dual mandate objectives

• To decrease unemployment rates

• To reduce interest rates further

• To increase government spending

What core inflation rate does the speaker aim for to indicate a balanced perspective?

• 3.0%

• 1.5%

• 2.0%

• 2.5%

What is the speaker's view on maintaining the funds rate until inflation reaches a certain level?

• Increase it immediately to control inflation

• Decrease it to stimulate the economy

• Keep it at zero to 1/4 percent until inflation reaches 2%

• Keep it constant regardless of inflation

According to the speaker, what is the role of forward guidance in monetary policy?

• To decrease government intervention

• To provide clear expectations about future policy actions

• To increase inflation unpredictably

• To confuse market participants

What does the speaker suggest about the labor market when interest rates start to rise?

• It will decline significantly

• It will not be affected

• It will be as strong as expected

• It will be weaker than expected