The Federal Reserve is charged by Congress to accomplish full employment and stable prices. For economists, these objectives pose a tradeoff, and the Fed targets 2% inflation as a compromise. The Phillips Curve postulates that as unemployment falls, workers get more bargaining power and push up wages and prices. Read More...
Why the Fed should ditch its 2% inflation target
The Federal Reserve is charged by Congress to accomplish full employment and stable prices. For economists, these objectives pose a tradeoff, and the Fed targets 2% inflation as a compromise. The Phillips Curve postulates that as unemployment falls, workers get more bargaining power and push up wages and prices.
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