The Fed's 2 Percent Inflation Target Is An Average, Not a Ceiling

This point is worth mentioning in the context of a comment by Esther L. George, president of the Federal Reserve Bank of Kansas City, to CNBC yesterday. Ms. George said:

"While we haven’t hit 2 percent, I’m reminded that 2 percent is a target over the long term, and in the context of a growing economy, of jobs being added, I don’t think it’s an issue that we should be particularly concerned about unless we see something change."

Actually, the Fed's stated policy is that 2 percent is a targe...