by Ann Saphir
Reuters.com
PALO ALTO, California, May 3 (Reuters) – The U.S. central bank’s 2% target for inflation is key to achieving price stability and essential for ensuring economic prosperity, New York Federal Reserve Bank President John Williams said on Friday.
His defense of the inflation target comes amid persistent calls from some corners for the Fed to overhaul the way it guides, sets and communicates policy.
“Theory and experience have also shown the importance of transparency and clear communication, including setting an explicit, numerical longer-run inflation target, and of taking appropriate actions to support the achievement of that goal,” Williams told a monetary policy conference at Stanford University’s Hoover Institution. “These are critical in anchoring inflation expectations, which, in turn, help keep inflation at the target.”