While inflation ranges may offer technical advantages, they risk blurring accountability and weakening confidence in the Federal Reserve when clarity is most needed.

US Treasury Secretary Scott Bessent has suggested shifting the Federal Reserve from a fixed two-percent inflation target to a broader range. The change may seem minor, but it risks redefining accountability at a moment when inflation has already strained public trust.

Bessent floated the proposal on December 22 during an appearance on the All-In Podcast.

“This idea that we can have this decimal point certainty is just absurd,” he declared.

It would be a major shift in policy if the Fed ended its fixed inflation target mandate.

While the Fed officially adopted the two-percent inflation target in 2012, governors long considered inflation control a top priority. It was seen by supporters as a way to increase transparency and – more importantly – keep the financial markets stable.

However, the US hasn’t stayed under its two-percent inflation target for almost five years.

The inflation target range, argued Bessent, would give the Fed some wiggle room. He said a 1.5 percent to 2.5 percent spectrum or a one-percent to three-percent spectrum made more sense. If the US remained within its inflation target, financial markets would likely be more stable, reducing the risk that investors get spooked if inflation rose by a percentage point or two.

Economists say Bessent’s proposal has merit, given the current economic conditions.

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