Fed’s average inflation targeting to have little impact on economy – Reuters poll

The latest Reuters poll of 47 economists showed that a majority of them believe that the US Federal Reserve’s (Fed) new monetary policy framework targeting inflation (AIT) will not have any significant impact on the economy.

Key findings

“The Fed's preferred inflation gauge - the core Personal Consumption Expenditures (PCE) price index - was forecast to average 1.3% this year, 1.5% next and 1.7% in 2022, largely unchanged from the previous poll.”

“Over three-quarters of 47 economists responding to an additional question said the Fed's change would not have any significant impact on the US economy, which suffered its biggest fall since the Great Depression last quarter.”

“While unemployment was forecast to fall gradually - averaging 8.6% this year, 7.3% next and 5.6% in 2022, that would still be well above the pre-COVID-19 rate of 3.5%.”

“Asked which presidential candidate's policies would generate the best U.S. economic outcome in the long run, 27 of 39 respondents chose Democrat Joe Biden over incumbent Republican President Donald Trump.”