Kansas City Fed President Esther George said in a speech that the revised FOMC statement is interpreted as a “tolerance” for higher inflation, “less as a promise to engineer” it. Also, there is “little benefit” in getting too tied up in a “precise mathematical formulation” of the “average”.
She also viewed the statement as a “message of patience”. That is, “we are signaling that the committee is unlikely to preemptively tighten policy at the prospect that inflation is approaching 2 percent, but rather a willingness to wait until the data confirms its arrival”.
Nevertheless, “given an unsettled outlook for inflation, it is not yet clear how much patience will be required,” she added. ” The pandemic has affected prices in a variety of ways, and it will be difficult to assess the underlying pace of inflation until the dust settles. ”
