The United States central bank rolled out a major policy change on Thursday, August 27, that gives greater weight to its mission of maximizing employment to benefit lower-income families, while ratcheting back its emphasis on fighting inflation.Chair Jerome Powell said the aim is to correct the"shortfalls" in achieving the Fed's goal of maximum employment and to recognize that, with changes in the global economy, a tight job market does not necessarily drive prices higher.
The new policy makes it clear the central bank will allow inflation to stay above its 2% target"for some time" before officials will need to take action by raising interest rates. "This change may appear subtle, but it reflects our view that a robust job market can be sustained without causing an outbreak of inflation," he told the virtual conference.
Advocates of the new regime have argued the central bank needed to let the inflation rate drift higher to average 2% over the long run.The Fed chief grew passionate as he described the impact of hearing from low-income workers about the dramatic change the higher employment rate had on their communities in recent years.
Source: News Formal (newsformal.com)
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