Powell Says Fed Will Seek Inflation That Averages 2%

The transcript discusses the importance of maintaining inflation expectations at 2% to ensure effective economic policy. It highlights the risks of inflation consistently running below 2%, which could lead to lower expectations and realized inflation. To counter this, a new strategy aims to average 2% inflation over time, allowing for periods of inflation above 2% following downturns. This approach is flexible and not bound by a strict formula. The transcript also emphasizes readiness to act against excessive inflationary pressures.

What potential consequences are mentioned if inflation expectations fall below the target?

In what situations would the monetary policy not hesitate to act according to the statement?