BNP - Federal Reserve Policy Outlook: Time for a Strategy Reboot?

Summary

►  Downside risks to global growth, the fragility of inflation expectations and the proximity of the zero interest rate lower bound all point to challenges ahead for the Federal Open Market Committee (FOMC) in reaching and sustaining inflation at the two percent objective.

►  Indeed, there are already signs that the long period of undershooting the inflation objective is damping inflation expectations. 

► Given the aforementioned risks, the Committee should consider a strategy shift, delaying further rate increases until inflation hits two percent and looks set to  remain at or above that level.