NORFOLK, Va., May 2 (Reuters) - It would be “very dangerous” for the Federal Reserve to adopt a higher inflation target to spur growth in the hopes that it could bring inflation down later when it needed to, a top Federal Reserve official said on Wednesday.
“I don’t think it would be easy to temporarily adopt a higher target and then successfully return to a lower inflation,” Richmond Federal Reserve President Jeffrey Lacker told reporters after a speech. “In fact, I think it would be very dangerous.”
Some economists have suggested that central banks should shoot for higher-level inflation in order to have more room for monetary policy to react to shocks. The Fed currently targets inflation at 2 percent.