Fed's Clarida: If inflation expectations 'drift up persistently,' Fed would need to respond

FILE PHOTO: Federal Reserve Vice Chair Richard Clarida reacts as he holds his phone during the three-day “Challenges for Monetary Policy” conference in Jackson Hole, Wyoming, U.S., August 23, 2019. REUTERS/Jonathan Crosby/File Photo

WASHINGTON (Reuters) – The Federal Reserve’s “metric of success” on inflation is keeping expectations about future price increases anchored at 2%, Fed Vice Chair Richard Clarida said on Wednesday.

“Any monetary policy that we are going to bless is never going to eliminate all inflation volatility. Inflation itself is always going to move around. The metric of success is longer run inflation expectations well anchored,” Clarida said.

If a new Fed index of expectations were to “drift up persistently … that would indicate to me that policy would need to be adjusted.”

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