Has the Fed Quietly Raised Its Inflation Target? | Presented by CME Group

Summary

The video questions whether the Federal Reserve has silently adopted a higher inflation target after holding rates steady despite 3.7% PCE inflation and 63 consecutive months above its official 2% goal, suggesting investors should reassess the path of future monetary policy.

• The Fed held the federal funds rate at 3.625% under new Chairman Kevin Worsh.
• PCE inflation came in at 3.7%, marking 63 consecutive months above the 2% target.
• The decision raises doubts about the central bank's commitment to its 2% inflation target.
• Possible reasons include an external oil supply shock or reluctance to engineer a slowdown.
• The flexible average inflation target framework may still be in effect to offset past undershoots.
• The video implies investors should consider whether the Fed has quietly accepted higher inflation.