WASHINGTON, March 24 (Reuters) - The Federal Reserve is not trying to push inflation higher to compensate for years of weak price increases, but aiming instead to ensure its 2 percent target is viewed credibly, San Francisco Fed President John Williams said on Friday.
Fed officials’ recent statements that the U.S. central bank was willing to allow above-target price increases were intended to ensure that expectations don’t slip, Williams said at an event in Washington.
Unless inflation stays around 2 percent on average, “there is a risk that people start thinking the Fed, well they say 2 percent but they are really going for one and a half. And then you miss on that, there is a fear it deteriorates further,” he said. (Reporting by Howard Schneider; Editing by Paul Simao)