Economics
Rate-Hike Patience May Leave Fed in a Bind If Inflation Softens
- Fed is keeping rates steady amid above-trend economic growth
- Officials face a tough call if inflation weakens below target
This article is for subscribers only.
Federal Reserve officials say they’re willing to tolerate an overshoot of their inflation goal. If the opposite happens, the plan is less clear.
Core inflation, excluding energy and food prices, is currently just shy of the central bank’s 2 percent target. Most economists and policy makers see that lasting, though there’s no guarantee: Inflation expectations have been stuck on the low side, and a cooler housing market is among several factors that could weigh on future price pressures.