The Fed claims it has a symmetric inflation target. The Committee reaffirms its judgment that inflation at the rate of 2 percent is most consistent over the longer fomc forex live with the Federal Reserve’s statutory mandate. The Committee would be concerned if inflation were running persistently above or below this objective. Numerous Fed officials have repeated this point as well.

They too see the inflation target as a symmetric one, an understanding that allows for an occasional inflation overshoot. Despite these claims, however, the Fed has persistently undershot its inflation target. Each participant’s projections are based on his or her assessment of appropriate monetary policy. So the SEP reveals FOMC members’ forecasts conditional on the Fed doing monetary policy right. And for the longest time, doing monetary policy right was not overshooting 2 percent inflation in the next year, as seen in the figure below.

It is hard to square these revealed preferences from the SEP with a symmetric inflation target. FOMC members in the March FOMC meeting decided it was time to give inflation overshooting a try. They did not say so explicitly, but did so implicitly via the SEP. For the first time since 2009, the SEP’s central tendency forecast for core PCE inflation in the next year breached 2 percent. Specifically, this central tendency forecast for 2019 ranged from 2. A few participants suggested that a modest inflation overshoot might help push up longer-term inflation expectations and anchor them at a level consistent with the Committee’s 2 percent inflation objective. Maybe all complaining about the lack of an inflation overshoot has finally come to fruition.