Bloomberg Businessweek

Is the Fed’s Inflation Target Kaput?

The change in leadership at the U.S. central bank could trigger a policy rethink

As Jerome Powell prepares to take over as chairman of the Federal Reserve on Feb. 5, some of his colleagues are publicly agitating for a radical rethink of the central bank’s playbook for guiding monetary policy. Behind the push for reconsideration of the Fed’s 2 percent inflation target: a fear of running out of monetary ammunition in the next recession.

With interest rates near historically low levels—and likely to remain that way for the foreseeable future—these officials worry the Fed will have little leeway to aid the economy when a downturn inevitably hits. They argue that revamping the inflation objective beforehand could

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