Though Inflation Appears Tame, Fed to Focus on Clouds in Forecast; Despite Benign Reports, Officials May Emphasize Risk Factors in Outlook
WASHINGTON -- With inflation soon likely to drop into the Federal Reserve's so-called comfort zone of 1% to 2%, Fed officials are seeking to shift their emphasis away from today's benign inflation readings to the more uncertain path of future inflation.</br></br>To that end, the central bank's policy makers, when they meet next Wednesday and Thursday, are likely to continue to highlight the risks that low unemployment could yet push inflation higher.</br></br>At next week's meeting, Fed officials are expected to debate whether to continue describing inflation as "elevated" in their post-meeting policy statement, an issue complicated by their lack of consensus on whether inflation ought to be much lower than it already is.</br></br>There is little chance the Fed will alter its target for short-term interest rates, which has stood at 5.25% since last summer. Officials appear on hold for at least the next several months.</br></br>Inflation alarms sounded at the Fed when the annual pace of core inflation, which excludes food and energy prices, jumped to 2.4% in February from 2.1% in December, as measured by the Fed's preferred inflation gauge -- the price index for personal consumption expenditures. The jump prompted officials to describe inflation as "elevated" following their March and May meetings.