Fed Can Tolerate Inflation Up to 3%, Says Greene

The video discusses the dynamics of inflation and the strategies central banks, particularly the Federal Reserve, employ to manage it. It explores whether the Fed should act preemptively or wait until inflation is evident. The Fed's current strategy involves allowing inflation to overshoot the 2% target to average it out over time. The video also highlights the challenges central banks face with deflation and the importance of having rules to manage inflation. The Fed is willing to tolerate inflation rates between 2.5% and 3% due to persistent undershooting of targets since 2012.

What is the significance of the Fed's target inflation rate of 2%?

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How does the Fed plan to address the issue of persistent low inflation?

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