Federal Reserve's Inflation Target Challenges

The chapter explores the Federal Reserve's pursuit of a 2% inflation target and the difficulties in achieving this goal. It delves into the risks of rushing to meet the target, the impact on labor income and the economy if not achieved thoughtfully, and the challenges of lags in monetary policy transmission. The conversation also considers the balance between inflation targets and employment metrics amidst uncertainties surrounding interest rate cuts and the fear of potential inflationary shocks.