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The Fed’s 2% inflation target is a source of growing liberal discontent

The Federal Reserve’s goal is to get the inflation rate at least near 2% before it begins cutting interest rates.

That’s a formal target backed by written policy, but it’s also the source of growing liberal discontent serving as another form of political pressure on Fed Chair Jerome Powell as he tries to navigate a white-hot election year.

Some on the left want that number to be higher. Some would prefer the Fed add a second target focused on the labor market. And several Democrats used public hearings this past week with Powell to question the target’s origins and why it has so much importance inside the central bank.

“It seems to come from Auckland and from the 1980s” a somewhat disbelieving Rep. Brad Sherman said on Wednesday when it was his turn to question Powell.

The liberal stalwart from California was right. The path to 2% began with an off-the-cuff comment in New Zealand in…

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