Should The Fed Adopt A 3% Inflation Target, Generate High Pressure Economy?

In a speech October 14, US Federal Reserve Chair Janet Yellen indicated a high pressure economy, one tolerant of elevated inflation, may be the only way back from the 2008 financial crisis. Why would the Fed open its mind to higher inflation in advance of a potential December rate hike? While that a “hot” economy benefits an often overlooked and currently angry demographic, a Goldman Sachs report raises the question: will the economic benefits be long lasting?

A high pressure economy with higher inflation

Central bank policy makers eyeing the point when an interest rate rise might be appropriate have had their eyes on several numeric benchmarks, many of which...