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The Fed’s New Monetary Policy Framework One Year Later
St. Louis Fed President James Bullard discusses the implementation of the FOMC’s new monetary policy framework, which includes flexible average inflation targeting.
Working Paper
Tempting FAIT: Flexible Average Inflation Targeting and the Post-COVID U.S. Inflation Surge
In August 2020, the Federal Reserve replaced Flexible Inflation Targeting (FIT) with Flexible Average Inflation Targeting (FAIT), introducing make-up strategies that allow inflation to temporarily exceed the 2% target. Using a synthetic control approach, we estimate that FAIT raised CPI inflation by about 1 percentage point and core CPI inflation by 0.5 percentage points, suggesting a moderate impact net of food and energy and a largely temporary effect. Short- to medium-term inflation expectations increased by approximately 0.8 percentage points, while long-term expectations remained ...
Journal Article
The Fed’s New Monetary Policy Framework One Year Later
St. Louis Fed President James Bullard discusses the implementation of the FOMC’s new monetary policy framework, which includes flexible average inflation targeting.