CHICAGO (Reuters) - Federal Reserve officials have discussed adopting an explicit inflation target to help keep expectations in check, Fed Chairman Ben Bernanke said on Wednesday, confirming reports in recent weeks.
But don’t expect it to take action any time soon. Without buy-in from lawmakers, the administration, and the public at large, Bernanke suggested, the idea of pegging Fed policy to a specific inflation goal is a non-starter.
“There’s nothing imminent,” Bernanke, a longtime advocate of a target, said in a news conference following a two-day policy meeting at which the Fed decided to keep rates near zero for an extended period.
Bernanke reiterated his view that an inflation target could help the Fed meet both its goals of keeping prices stable and maximizing employment but suggested he would need to convert more people to that view.
“We need to make sure that it is well understood both by the public and by Congress that having a target would not mean that we are abandoning the other leg of the dual mandate,” Bernanke said. “I don’t think there’s a real barrier to setting a target. However it is very important that first, that we communicate to the public what we are doing.”
Several Fed officials in recent weeks have pushed for an inflation target as the Fed nears the end of its latest bond-buying stimulus.
Since 2009, the Fed under Bernanke’s leadership has published long-run inflation forecasts that act as an informal inflation target. On Wednesday the Fed reiterated its longer-run forecasts for inflation at 1.7 percent to 2 percent.
Forecasts published on Wednesday show the Fed expects the recent rise in inflation above those levels to be short-lived. But without the anchor of an inflation target, St. Louis Fed President James Bullard and others have said, the Fed’s ultra-easy money policy could spark runaway inflation fears.
Many central banks around the globe, including Europe’s, already operate under a formal target.
“I think it is something that is worth considering,” Bernanke said on Wednesday.
Reporting by Ann Saphir; Editing by Kenneth Barry