Fed’s Williams says moderate inflation overshoot acts as guardrail

(Reuters) – The Federal Reserve’s new pledge to keep interest rates at zero until inflation is on track to “moderately” exceed 2% has come under fire for being overly vague and leaving too much up to U.S. central bankers’ judgment, but that’s exactly the point, a key author of the pledge said on Wednesday.

“Moderate isn’t a number…it’s a guardrail” against expectations that the Fed would tolerate very high or persistently high inflation, New York Fed President John Williams (NYSE:) said at a virtual conference held by the Hoover Institution. “It’s also about proportionality; if we are undershooting the target by a few tenths… then you are obviously thinking that that’s the proportionality that you are thinking about in terms of trying to get that balance of 2%, but it is specific to the circumstances,” and where the economy is.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.