To The Moon

Some want to raise the Fed’s inflation target — say, to 3% from 2% — so the Fed will have more room to cut interest rates before hitting the zero lower bound. This is a bad idea. Changing the target would risk the stability of inflation expectations that proved so important during the pandemic: If the Fed moves the goal posts once, people might reasonably worry that it’ll do so again. Also, the Fed might not need more room. If the neutral interest rate has risen, as generally believed, that leav