Fed’s Fixation on 2% Inflation Target Is Risky: Mohamed El-Erian

The Federal Reserve is widely expected to keep interest rates unchanged at its policy meeting next week, shifting the market’s focus to signals about what comes next. Yet, behind the scenes, something far more consequential to the wellbeing of the US is playing out: A review of the Fed’s monetary policy framework.

This appraisal of the central bank’s communication, strategy and policy tools was initiated last year and is expected to conclude in August. It aims to ensure that the Fed’s actions and words are effective in delivering its dual mandate of maximum employment and price stability.

A similar review in ...