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FOMC Announces Longer-Run Goals: Average Inflation Target

This Thursday marked the culmination of a year and half long policy framework review by the Federal Reserve.  And the results can be summed up pretty quickly. In this case, three letters suffice: “AIT” or Average Inflation Targeting. 

Under its newly announced policy framework, the Fed will explicitly aim to achieve average inflation of 2%. And, most importantly, if inflation has persistently undershot 2%, the Fed will “likely aim to achieve inflation moderately above 2 percent fo...

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