Three senior Fed officials send a major signal: Support shifting the inflation target from 2% to a range.

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Three Federal Reserve officials have successively voiced support for adopting an inflation target range instead of the current fixed 2% target, suggesting the central bank's policy framework may face adjustments.

This week, Fed Governors Milan and Bowman, as well as Atlanta Fed President Bostic, gave speeches at different events, all believing that replacing the precise 2% target with an inflation target range has its advantages.

In the Federal Reserve's five-year policy framework review completed last August, inflation target adjustments were excluded, but officials' latest remarks show that internal discussions are still ongoing.

These discussions emerge against a subtle political backdrop. Since the beginning of this year, President Trump has been pressuring the Federal Reserve to lower interest rates.

With Chairman Powell's term set to end next May, Trump will have the opportunity to appoint a new candidate, sparking market speculation about possible structural changes at the Fed under new leadership.

Trump Allies Speak Out First

This week, the three officials explained the rationale for an inflation target range from different perspectives.

On Monday, Trump ally and Fed Governor Milan, who joined the Fed temporarily on September 16, said at the Economic Club of New York:

An overly precise inflation target may lead to excessive micromanagement.

He pointed out, “Measuring inflation is extremely difficult,” and believes that reverting to the pre-2012 approach of pursuing “low and stable prices” without setting a specific value is also “an interesting way.”

However, Milan emphasized that before making any changes, officials must first bring inflation back to 2%.

A Potential Powell Successor Echoes

On Tuesday, Governor Bowman, appointed by Trump and considered one of Powell's potential successors, also expressed similar views. Speaking at the Kentucky Bankers Association annual meeting, she said:

Other countries around the world have already adopted target ranges.

She believes:

This approach can spare us from excessive anxiety over a precise level of inflation.

Bowman downplayed the possibility of an immediate policy shift but added that “it is always important to have a dialogue.”

Regional Fed President Proposes a Specific Range

Also on Tuesday, Atlanta Fed President Bostic said in a podcast that the public sometimes misunderstands the Fed’s ability to achieve perfect precision in anchoring the inflation target. He stated:

As far as the inflation target is concerned, I am actually open to using a range.

Asked about the ideal range, Bostic believes it needs to be narrow enough to prevent inflationary momentum from accumulating, giving the example:

Possibly between 2.25% and 1.75%.

Policy Background and Market Impact

The deeper backdrop of discussions about establishing an inflation target range is the Fed’s long-standing difficulties in achieving the 2% target.

Data show that, affected by the economic disruption caused by the COVID-19 pandemic and more recently by the Trump administration’s tariffs on global trading partners, U.S. inflation has remained above the 2% target for the past four and a half years.

However, before 2020, the Fed was long troubled by the opposite problem—by inflation persistently under the target.

At the time, this trend worried policymakers, who believed low inflation would hinder their ability to raise interest rates to more normal levels.

This historical “two-way deviation” from the target highlights the difficulty of managing inflation precisely and provides a realistic basis for adopting a more flexible inflation target range.

Risk Warning and DisclaimerMarkets are risky; investing needs caution. This article does not constitute personal investment advice and does not take into account individuals’ specific investment objectives, financial situations, or needs. Users should consider whether any opinion, viewpoint, or conclusion in this article is suitable for their particular situation. Investing accordingly is at your own risk. ```