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The newly released transcripts from the Federal Reserve’s 2020 policy meetings reveal Chair Jerome Powell championing a significant policy shift he later came to regret. This change relates to the central bank’s new “average inflation targeting” strategy, adopted to stimulate the economy during the onset of the COVID-19 pandemic. The transcripts expose the internal debate and Powell’s pivotal role in the decision. However, with the subsequent surge in inflation, this strategy became controversial, leaving the Fed struggling to catch up. The meeting logs ultimately document the central bank’s miscalculation regarding the persistence of price pressures.
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