Why 2% Is the Fed’s Magic Inflation Number | WSJ

Inflation is slowly easing, but it’s still far from the Fed’s 2% goal.

WSJ’s Nick Timiraos explains how 2% became the Federal Reserve’s sweet spot, what happens when the U.S. economy strays too far from it, and how a key strategic policy called "anchoring" helps manage the central bank's economic expectations.

0:00 The Fed has a long way to go to get inflation down to 2%
0:37 History of controlling strategic inflation goals
1:59 Why is exactly 2% inflation the Federal Reserve’s goal?
4:25 Is setting a targeted inflation rate an effective monetary policy?

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#Inflation #Fed #WSJ

[NicholasBall]

The system is failing as a result of both government and federal policy. In the next days, the banking crisis would have to be epic and gigantic for the FED to decide not to raise interest rates. This won't happen; an increase and a crash are coming. There will be more negative portfolios this 2nd half of 2024 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?Read more

[SteveDutton-v]

Economists and business leaders are voicing concerns at the start of 2023 that the year could be a difficult one. JPMorgan Chase & Co. Chief Executive Jamie Dimon said that the Federal Reserve may need to raise interest rates to 6% to fight inflation, higher than the peak level between 5% and 5.5% in 2023 that most Fed officials penciled in after their December meeting. Although I read an article of people that grossed profits up to $500k during this crash, what are the best stocks to buy/short now or put on a watchlist.

[Raymondjohn]

Some economists have projected that both the U.S. and parts of Europe could slip into a recession for a portion of 2023. A global recession, defined as a contraction in annual global per capita income, is more rare because China and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth.

[shellylofgren]

inflation can be pursued only so long as the public still does not believe it will continue. once the people generally realized that the inflation will be continued on and on and that the value of the monetary until will decline more and more, then the fate of the money is sealed .only the belief, that the inflation will come to a stop, maintain the value of the notes ? however, I believe that this fluctuation a simple part of the journey towards mainstream adoption and eventual stabilization. I think it's more likely for BTC, ETH, XRP to retest the resistance to the upside and then remove lower

[blaquopaque]

FED: We need people unemployed and bankrupt to calm inflation.. 2 days later SVB goes under FED: Wait, not THOSE people, only poor and middle class can fail in this economy, as usual.... Well given the global economic crisis we are currently experiencing Investing in alternative income streams that are independent of the government should be the top priority for everyone right now.. A variety of stocks and digital currencies are still attractive investments right now.

[salvadorcarbajal]

Mrs Christina the bitcoin trader is legit and her method works like magic I keep on earning every single week with her new strategy

[allensu]

When I learned about the 2% target in AP Econ I assumed that was policy in the 1960s or something. Very surprised it started in 2012

[jnvxute]

I don't know much about it, but I've heard that the US government's vigorous fiscal stimulus has increased the inflationary trend, and that the central bank needs to raise interest rates in order to control inflation.

It is ironic that the central bank is the only one to get the hate, while the government is more responsible for inflation.

[YorickReturns]

Lol at the propaganda against "deflation". Just ignore the real world, where people need to buy food (even if it's going to be cheaper next week), and where people line up to pay top dollar for the newest videogame machine. WSJ is parroting the statist line.

[AnnaKrueger]

I began accumulating wealth when I started following up my investment properly, The value of expert mentorship cannot be overstated. Without proper mentoring, people tend to make mistakes and loose money. This is why I prefer to invest with Juliann Hart because her methods are unique and extremely profitable-

[daveSoupy]

after listening to a few different podcasts talk about inflation 2% is a really good target. only having a 10% premium difference over the course of 5 year isn't bad especially compared to 6 to 7% year over year.

[anthonyrussell]

FED's focus is not on combating inflation. Stocks and commodities will continue to rise along with everything else as they continue to swell. You can't just sit on cash and wait for a fall; you need to put your money to work, start investing gently, and then pick up the speed of investing as the price of your investments drops.

[dimasrahardja]

The FED knows. They aren't committed to attacking inflation. They are going to continue to inflate, stocks and commodities will continue to go up with everything else. You can't just sit on cash waiting for a crash, get your money working for you, start buying in slowly and then gradually increase the pace of buying as the prices continue to drop.

[rcdriver]

The real inflation is always at 15% or a lot

[wc]

I find Cental Bank's problem with fighting inflation, by raising interest rates so rapidly in 2022-3, has led to increased foreclosures and worse, run on banks (SVB) as we've seen now... the Fed needs to be gentle in fighting inflation, not haphazardly like there's no tomorrow....

[sweeseen]

I'm not sure about the target set is effective or not. The place where i stay, the price of goods never go down except fuel prices…

[_el.guapo_]

Can somebody explain why we had had such good inflation rates for 11 years (between 2009 and 2020) while QE was increasing (from $1.5T to 4T$) ? Wouldn't more QE mean higher inflation ?

[johnbeckwith]

The real key to stopping inflation is for Congress to stop the deficit spending.
America needs a Balanced Budget Amendment added to the Constitution.

[jaad]

The inflation number should be pegged to actual needs like housing and food. I am pretty sure the Fed is completely missing their 2% target and just being balanced out by cheaper goods that arent needed for annual purchases like phones/refridgerators/cars

[amatvkhmer]

Why 2% do not understand, please tell me