Bessent supports reconsidering Fed’s 2% inflation target

Investing.com -- Treasury Secretary Scott Bessent has expressed support for reconsidering the Federal Reserve’s 2% inflation target once price increases are sustainably brought down to that level.

"Once we are back to 2 — which I think will be in sight — then we can have a discussion: Is it much smarter to have a range?" Bessent said during an interview on the All-In Podcast released Sunday.

The Federal Reserve formally adopted its current 2% target in 2012, a benchmark shared by many central banks globally. Bessent cautioned against changing the target while inflation remains above it, warning this could create the impression that policymakers would "always fudge upward" when targets are exceeded.

"It’s very difficult to re-anchor until you meet the target and maintain credibility," he stated.

The Treasury Secretary acknowledged economic challenges facing Americans, saying "we understand that the American people are hurting." He attributed the high price levels to policies of the Biden administration while noting that inflation is "starting to roll down," partly due to decreasing rents.

Regarding the most recent Consumer Price Index report, Bessent believed it was "a pretty accurate number" despite some economists raising concerns about potential measurement issues related to the October-November government shutdown. He noted that while some components like energy showed increases, real-time figures indicate downward trends.

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