US Fed Inflation Target Under Fire as Council Expresses Concerns

The OMFIF advisory council has raised concerns about the US Federal Reserve's ability to meet its inflation target. The council, which met on August 5, discussed the recent appointment of Kevin Warsh as Fed chair and his apparent acceptance of a 3% inflation rate, despite the official target being 2%. This shift in stance is seen as a significant departure from the Fed's usual commitment to price stability.

The council also examined the US Treasury leg of the combined intervention to strengthen the yen by the US and Japanese monetary authorities. However, it is unclear what impact this will have on the global economy, particularly given the recent volatility-inducing Fed communications.