Powell Says Fed Wants to Make Two Percent Inflation Target 'Highly Credible'

The transcript discusses the Federal Reserve's approach to inflation targeting, debating whether to target a price level instead of a change in the price level. Concerns are raised about intentionally exceeding inflation targets, given historical challenges in controlling high inflation. The economic context of low interest rates and their impact on inflation expectations is explored. Strategies to ensure credible inflation targets are considered, with a call for caution in policy decisions to avoid economic instability.

What are the potential implications of lower real rates on inflation during a typical downturn?

What is the speaker's stance on the need for caution regarding the Fed's inflation targeting strategy?