Morgan Stanley's Kushma Questions Central Bank Credibility on Inflation

The video discusses the Federal Reserve's consideration of raising the inflation target, despite challenges in meeting the current target. Mohamed Al Arian questions the feasibility and risks of this move. The discussion includes examples from Japan and the Eurozone, where central banks struggle to meet inflation targets despite various measures. The video concludes with a discussion on the credibility of central banks in managing inflation.

What are the implications of the Federal Reserve potentially raising the inflation target?

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Why might it be problematic for the Fed to raise the inflation target if it struggles to meet the current one?

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What examples are given to illustrate the challenges faced by central banks in achieving their inflation targets?

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How do negative rates and balance sheet expansion relate to the effectiveness of achieving inflation targets?

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What question does the text raise about the credibility of central banks in raising inflation?

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