Clarida Says `Powell Put’ Is Not a Useful Concept
Federal Reserve Vice Chairman Richard Clarida said the U.S. central bank will defend both sides of its inflation target and cautioned investors against thinking the Fed would act to halt a sharp market decline.
“I don’t really think of it as a useful way to describe what the current Federal Reserve is doing,” he said Monday when asked about the concept of a “Powell put” in an interview on Bloomberg Television.
Clarida, who took his post in September, said the Fed would tolerate inflation rising slightly above its stated 2% target for inflation.
“We have a symmetric objective around 2%,” he said. “Two percent is not meant to be a ceiling. We’ve operated below 2%, we could operate somewhat above 2%, depending on the shocks.”
He added, however, that the Fed has been more focused in recent years on preventing inflation from falling below its target than drifting above.