Dudley Says Fed Likely 'Uncomfortable' With Asset Inflation

The transcript discusses the Federal Reserve's shift in inflation policy, moving from a strict 2% annual target to a more flexible average target. This change aims to keep inflation expectations anchored at 2% by allowing for periods of inflation above 2% if needed. The rationale for maintaining a 2% target is to ensure enough room for interest rate cuts during economic downturns. The discussion also covers the impact on employment goals, asset prices, and the historical context of monetary policy. The Fed's tools for managing inflation and the potential global impact of these policy changes are also explored.

How does the text characterize the historical context of the Federal Reserve's policies?

What skepticism exists about the Federal Reserve's ability to boost inflation above 2%?

What tools does the text suggest the Federal Reserve might use to stimulate the economy?