The Federal Reserve on Friday discarded a central element of the framework it adopted five years ago, formally abandoning a strategy that sought to allow inflation to run modestly above its two percent target in certain circumstances.
The change, announced in a revised statement of the Fed’s longer-run goals and outlined in remarks by Chair Jerome H. Powell, reflects lessons from the turbulent post-pandemic years, when prices rose at the fastest pace in four decades and remained above target for more than four years.
“The idea of an intentional, moderate inflation overshoot had proved irrelevant,” Powell said in a speech at the Kansas City…
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