Bessent Sees Room for a Future Revamp of the Fed's 2% Target [View all]

Source: Bloomberg

December 23, 2025 at 10:27 AM EST
Updated on December 23, 2025 at 11:54 AM EST


Treasury Secretary Scott Bessent backed the idea of reconsidering the Federal Reserve’s 2% inflation target once the US has sustainably brought price increases back down to that pace. “Once we are back to 2 — which I think will be in sight — then we can have a discussion: Is it much smarter to have a range?” Bessent said in an interview on the All-In Podcast. “Once we re-anchor to the target, then we can talk about a range.”

The discussion could potentially be framed around a switch to 1.5% to 2.5% or 1% to 3%, Bessent suggested in the interview, which was posted on Dec. 22. “There is a very robust conversation” to be had, he said.

Fed policymakers in 2012 formally and publicly adopted the current 2% target, which is shared by many central banks around the world. Bessent said that the idea of “decimal-point certainty is just absurd.” But he said shifting the target at a time when inflation is running faster than that would risk giving the impression that “when you’re above a level, you’ll always fudge upward.”

The interview was recorded after the Dec. 18 release of the November consumer price index, which showed a 2.7% increase in the level from a year before. The Fed uses a separate gauge, the so-called PCE price index. The PCE climbed 2.8% over the 12 months to September, the most recent reading showed.

Read more: https://www.bloomberg.com/news/articles/2025-12-23/bessent-sees-room-for-future-revamp-of-fed-2-inflation-target?srnd=homepage-americas