Fed's Mester Says She's Comfortable With Inflation a Little Bit Above 2%

The video discusses the Federal Reserve's approach to managing inflation, aiming for a 2% target. It explains the importance of not overreacting to temporary fluctuations above this goal, provided forecasts predict a return to target levels. The discussion also covers the relationship between inflation and wage growth, highlighting the role of productivity and investment in influencing wages. The video emphasizes the need for careful economic forecasting to guide monetary policy decisions.

What is the primary goal of the discussed inflation policy?

• To keep inflation at exactly 3%

• To maintain inflation around 2%

• To allow inflation to rise indefinitely

• To reduce inflation to 1%

Under what condition is a temporary rise in inflation above 2% considered acceptable?

• If it is expected to continue rising

• If it is expected to return to 2% in the medium run

• If it reaches 3% permanently

• If it is accompanied by a decrease in wages

What is a key factor influencing wage growth according to the transcript?

• High productivity growth

• Unrelated to productivity growth

• Stable productivity growth

• Low productivity growth

Which segment of the workforce is experiencing notable wage growth?

• High-income earners

• All income levels equally

• Middle-income earners

• Low-income earners

What data is used as an indicator of wage inflation?

• Producer Price Index (PPI)

• Gross Domestic Product (GDP)

• Employment Cost Index (ECI)

• Consumer Price Index (CPI)