El-Erian, Rogoff Say It's Too Late to Fix Too-Low Inflation Target

2.15.23 - 'Catastrophe' if debt limit not raised?

Gold last traded at $1,836 an ounce. Silver at $21.63 an ounce.

El-Erian, Rogoff Say It's Too Late to Fix Too-Low Inflation Target - Yahoo! Finance

As we all await a financial reprieve, some analysts explain why we might be holding onto false hope. The problem? The Fed's aim might be way off; which makes hitting the desired target of lower inflation impossible to hit.

(Bloomberg) -- Wall Street's reaction to Tuesday's consumer-price index shows investors are realizing inflation is likely to remain higher than the Federal Reserve's goal for longer. Two heavyweight market voices say the 2% target is part of the problem.

"Back in the day, they should've said 3% instead of 2%," Kenneth Rogoff, a professor at Harvard University and former Fed economist, told Bloomberg Television Tuesday. "If you change it, it means you might change it again. Inflation they're going to allow to be elevated for longer but they're going to say it's going to get back to 2%, it's just taking longer. That will be the rhetoric."

Equities whipsawed Tuesday after data showed the CPI at 6.4% in January from a year earlier, still far above the Fed's goal despite months of interest rate increases. Following the report, a raft of Fed officials said the central bank may need to keep tightening to ensure inflation continues to fall.

Mohamed El-Erian, the chairman of Gramercy Funds and a Bloomberg Opinion columnist, also sees the Fed stuck with an inflation target that will be challenging to reach.