For over a year now, the Federal Reserve has been attempting to reduce inflation to its 2% target. Officials have raised interest rates faster than any of their predecessors to do this, and even after the second- and third-largest bank failures in U.S. history this month—which were caused at least in part by the aggressive rate hikes—officials plan to continue targeting that magical 2% figure.
“We do have a mandate legislated by Congress and the President to maintain stable prices for the U.S. economy. That’s in the law,” Federal Reserve Bank of St. Louis president James Bullard told Bloomberg Friday. “We’ve defined stable prices as 2% inflation. That’s an international standard that was developed in the 1990s. I think it would be a disaster to abandon that standard.”
