From "point target" to "range target"? US Treasury Secretary proposes reassessment of the Federal Reserve's inflation framework.

U.S. Treasury Secretary Benson indicated that once the United States is able to sustainably reduce the inflation rate back to the 2% level, the government could consider reassessing the current inflation target framework of the Federal Reserve and explore whether to shift from a single target to a range target. In a recent interview, Benson said: "When we return to 2%, which I believe is in sight, we can start discussing whether setting a range is wiser. It is more appropriate to talk about a range after re-anchoring the target." He further pointed out that potential adjustment options may include inflation ranges of 1.5%-2.5% or 1%-3%, and stated that there is very ample discussion space around this issue. Benson also emphasized that hastily adjusting the target when inflation is still above the target level may send a wrong signal to the market that inflation will continue to rise once it exceeds the target, thereby undermining the credibility of the policy. The Federal Reserve officially and publicly established a 2% inflation target in 2012, becoming a common reference for many central banks globally. Benson believes that being excessively fixated on "precision to the decimal point" is not realistic, but he also acknowledges that only when the target is truly achieved and maintained, can there be conditions to re-anchor inflation expectations. Data shows that in November, the U.S. Consumer Price Index rose by 2.7% year-on-year. The personal consumption expenditure price index that the Federal Reserve pays more attention to increased by 2.8% in the 12 months ending in September. When discussing the impact on people's livelihoods, Benson stated that it is "very difficult" to re-anchor inflation expectations when the standard is not met, and he acknowledged that high prices have put significant pressure on families, a dissatisfaction that was reflected in some non-regular elections in November. He said, "The American people are under pressure," attributing the significant increase in prices prior to this to the Biden administration, while also indicating that inflation has started to decline, with the decline in rents playing a significant role. Regarding the suggestion of some economists that recent CPI data may have measurement deviations due to the government shutdown from October to early November and statisticians being forced to take leave, Benson believes that the data is "quite accurate." He stated that although some subcomponents, including energy, still show volatility, overall prices are showing a downward trend based on observable real-time indicators.