that the Fed will now seek to target inflation that averages 2% over time, meaning that it can allow inflation to surpass that level during periods of economic recovery.
The Fed hopes that the change will help boost the labor market by keeping rates lower for longer and thus providing additional support for the economy. Keeping rates at their current levels means that borrowing costs for both businesses and consumers will stay lower for longer—it will be cheaper for small businesses to get loans, for instance, and cheaper to buy a home with a mortgage.
Researchers from Goldman Sachs found that an aggressive average inflation targeting policy would keep rates very low for a long period of time and would return inflation to its 2% baseline in about a decade.
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