Bessent Sees Room for a Future Revamp of the Fed's 2% Target

[BumRushDaShow]

Source: Bloomberg

December 23, 2025 at 10:27 AM EST
Updated on December 23, 2025 at 11:54 AM EST


Treasury Secretary Scott Bessent backed the idea of reconsidering the Federal Reserve’s 2% inflation target once the US has sustainably brought price increases back down to that pace. “Once we are back to 2 — which I think will be in sight — then we can have a discussion: Is it much smarter to have a range?” Bessent said in an interview on the All-In Podcast. “Once we re-anchor to the target, then we can talk about a range.”

The discussion could potentially be framed around a switch to 1.5% to 2.5% or 1% to 3%, Bessent suggested in the interview, which was posted on Dec. 22. “There is a very robust conversation” to be had, he said.

Fed policymakers in 2012 formally and publicly adopted the current 2% target, which is shared by many central banks around the world. Bessent said that the idea of “decimal-point certainty is just absurd.” But he said shifting the target at a time when inflation is running faster than that would risk giving the impression that “when you’re above a level, you’ll always fudge upward.”

The interview was recorded after the Dec. 18 release of the November consumer price index, which showed a 2.7% increase in the level from a year before. The Fed uses a separate gauge, the so-called PCE price index. The PCE climbed 2.8% over the 12 months to September, the most recent reading showed.

Read more: https://www.bloomberg.com/news/articles/2025-12-23/bessent-sees-room-for-future-revamp-of-fed-2-inflation-target?srnd=homepage-americas

[Chasstev365]

1. Of Course, because a Democrat is not president.

These people are so predictable.

[Igel]

2. "These people" wouldn't be able to make the suggestion under a (D) president.

"They" was (since it's just Bessent) appointed by Trump.

Nothing kept the previous Treasury secretaries from making the suggestion. Maybe they did, in private or in an offhand comment that nobody bothered to report on.

I like the lower figure. Inflation is depreciation of the currency. If you have fixed debt, it's great because you pay back with depreciated dollars. If you have assets, then you see what you thought was good decrease in value. That means long-term treasury debt, any asset that doesn't increase at the same rate of inflation.

Higher interest also pushes up the current rates for new issues of Treasury debt. So for the government it's a two-edged sword: The trillions in debt become worth less but new debt costs more.

[unblock]

3. Historically, republicans care much more about keeping inflation low than keeping unemployment low.

This is more a function of principle-free people trying to engineer political "wins" for their side. Really just whining that fighting inflation a harrrrd, especially when your policies involve massive deficits and a staunch refusal to pay for anything.

[progree]

4. Oh FFS, Beserk, who are you trying to fool? The Fed has cut interest rates 3 times beginning September 17, despite

year-over-year inflation being reported in the very high 2's, and recent (rolling 3 month inflation) above that and climbing, at the time of the rate cuts.

That's because of concerns about the weakening job market and economy. So while the Fed may trumpet a 2% goal, they've actually shown a lot of flexibility (or cave-in). Whatever, they are showing by their actions that they aren't 2% absolutists.

Rate cuts in 2025: 9/17, 10/29, 12/10

As for the PCE index, it's a greed-banger's wet dream. It fully includes substitution effects; for example if consumers switch from beef to less costly alternatives like turkey necks, it will reduce the PCE meat index or even cause it to decline. A 2% PCE target is easier to meet than for the CPI. But again no matter, they aren't acting like 2% is their real goal at this time.

The purchasing power of my bonds and annuity suffer heavily with inflation.

[progree]

5. Trump: "I want my new Fed Chairman to lower Interest Rates if the Market is doing well, not destroy the Market"

https://finance.yahoo.com/news/fed-chair-lower-rates-market-183423701.html
No paywall on this Yahoo - hosted article

Fed Should Lower Rates If the Market Does Well, Trump Says, Bloomberg, 12/23/25

“I want my new Fed Chairman to lower Interest Rates if the Market is doing well, not destroy the Market for no reason whatsoever,” Trump said in a social media post Tuesday. “Anybody that disagrees with me will never be the Fed Chairman!”

“In the old days, when there was good news, the Market went up,” Trump wrote. “Nowadays, when there is good news, the Market goes down, because everybody thinks that Interest Rates will be immediately lifted to take care of ‘potential’ Inflation.”

Fact check about the last sentence: There have been no rate increases in 2025, instead there have been 3 rate cuts, beginning with the one 9/17.

And there have been 4 rate cuts in the latter half of 2024, including one that was 0.50% instead of the usual 0.25%.

And the market has been hardly "destroyed" by "too late Jerome Powell" - the S&P 500 hit a new all-time-high today.
https://www.democraticunderground.com/111699775

[Skittles]

6. I don't believe ANY numbers coming from these corrupt freaks

so what is the point?