Fed’s Brainard backs ‘flexible inflation averaging’
Governor hints at possible outcome of Fed’s policy framework review
Lael Brainard has backed a policy of “flexible inflation averaging” as one way the US Federal Reserve could boost inflation expectations and reduce the risk of hitting the zero lower bound.
In remarks made on February 21, the Fed governor said she preferred flexible inflation averaging to other “make-up strategies” – those seeking to run inflation at a higher level after periods when it has fallen below target. She argued the policy could be “more robust and simpler to communicate” than a more
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