(FEDERAL RESERVE CHIEF JEROME POWELL): "The FOMC's strategy for achieving its goals, our policy framework, must adapt to meet the challenges that arise.”
Federal Reserve Chairman Jerome Powell laid out an aggressive new strategy Thursday aimed at getting millions of Americans back to work...by agreeing to sometimes let the economy run hotter than the Fed's 2 percent inflation target before tapping on the brakes with rate hikes.
In effect, the Fed is shifting from a hard inflation target to a soft one, in another unprecedented step to prove the age of easy money is here to stay… for as long as necessary.
"We are not tying ourselves to a particular mathematical formula that defines the average, thus our approach could be viewed as a flexible form of average inflation targeting. Our decisions about appropriate monetary policy will continue to reflect a broad array of considerations and will not be dictated by any formula. Of course if excessive inflationary pressures were to build or inflation expectations were to ratchet above levels consistent with our goal, we would not hesitate to act."
And that's not the only thing on the Fed's mind...in a nod to racial equity and its role in promoting economic growth, it thinks that by pledging not to rapidly raise rates once the labor market starts to rebound, it can convince employers to keep on hiring, and thus spread future economic gains to those traditionally left behind in previous upswings.
"Our revised statement emphasis that maximum employment is a broad based and inclusive goal. This change reflects our appreciation of the benefits of a strong labor market particularly for many in lower and moderate income communities.”
But the Fed admits that it doesn't expect that kind of recovery anytime soon, adding Thursday that, "downward risks to employment and inflation have increased."