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OpinionOpinionPast Article

Two Percent Is a Target, Not a Promise

The inflation goal is a stated aim. A single month above it is not a broken institution, and a single month at it is not victory.

By Samuel Ives, Opinion Editor

Washington1 min read

city buildings under blue sky during daytime
city buildings under blue sky during daytimePhoto by Shen Pan on Unsplash

The Federal Reserve says it aims at 2 percent inflation over the longer run. The sentence is a policy framework. It is not a warranty that the next CPI print will cooperate.

I think the public argument goes wrong in both directions. One side treats any reading above 2 percent as evidence the framework has failed. The other treats a friendly month as the end of the problem. Both readings steal a conclusion from a target. The target tells you what the committee says it wants. The index tells you what the basket did.

Critics can hold the committee to its own words without pretending the words are a forecast. When inflation is above the goal, say that, and cite the index. When the committee says the goal still stands, quote the statement. Do not add a timetable the statement did not offer.

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