NextFin news, On Tuesday, September 23, 2025, three Federal Reserve officials publicly discussed the potential benefits of shifting from a fixed 2% inflation target to a range-based target for U.S. monetary policy. The officials were Fed Governors Stephen Miran and Michelle Bowman, along with Atlanta Federal Reserve President Raphael Bostic.
The remarks came shortly after the Federal Reserve completed its quinquennial review of its monetary policy framework in August 2025, which notably did not include any changes to the inflation target. Despite this, the three officials spoke favorably about the idea of a target range, suggesting it could provide greater flexibility in managing inflation and economic growth.
Governor Stephen Miran, who was recently appointed and sworn in just before the Fed's September policy meeting, highlighted the advantages of a range in allowing the central bank to better respond to economic fluctuations without being constrained by a rigid 2% target.
Governor Michelle Bowman and President Raphael Bostic echoed similar sentiments in separate venues, emphasizing that a range could help the Fed balance its dual mandate of price stability and maximum employment more effectively.
The current inflation target of 2% has been a cornerstone of the Fed's policy for years, aiming to anchor inflation expectations and guide interest rate decisions. However, some policymakers have argued that a range could reduce the risk of overreacting to short-term inflation deviations and provide clearer communication to markets and the public.
The discussion about adjusting the inflation target framework comes amid ongoing economic challenges, including fluctuating inflation rates and a labor market showing signs of softening. The Fed's recent decision to cut interest rates in September 2025 for the first time this year reflects these complexities.
While the idea of a range has gained traction among some Fed officials, it remains a subject of debate within the central bank. Any formal change to the inflation target would require broad consensus and careful consideration of the implications for monetary policy credibility and effectiveness.
The Federal Reserve's commitment to maintaining price stability and supporting economic growth continues to guide its policy decisions, with officials closely monitoring inflation trends and labor market conditions as they navigate an uncertain economic landscape.
Source: Bloomberg, "Three Fed Officials See Advantages to Range for Inflation Target," published September 23, 2025.
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