Fed is “modestly to moderately behind the curve” on inflation - GS

Economist at Goldman Sachs (GS) said in its client note published late-Tuesday, the Federal Reserve (Fed) is “modestly to moderately behind the curve” on inflation, suggesting a faster pace of tightening in order to avoid inflation from overshooting its 2% target.

Key Quotes:

“Overall, standard policy rules suggest that the Fed is modestly to moderately behind the curve, but not to a degree that is comparable to the largest policy errors of the past or that could not be rectified by moderately faster tightening.”

“But the experience of the mid-1960s—a time when a sudden spike in inflation would have seemed similarly implausible—suggests some caution is warranted.”