Federal Reserve's Inflation Target Under Scrutiny as Janet Yellen Signals Policy Flexibility

Recent discussions have centered on a potential recalibration of the Federal Reserve’s long-standing inflation framework, with U.S. Treasury Secretary Janet Yellen emerging as a key voice in favor of reconsidering the existing approach.

According to sources, Yellen has advocated for broader policy flexibility around the Fed’s traditional 2% inflation target. The discussions are exploring alternative frameworks, including a wider band such as 1.5%-2.5% or possibly an even larger range of 1%-3%.

This potential shift represents a significant departure from the Fed’s historical commitment to the 2% benchmark, which has guided monetary policy for years. Janet Yellen’s public backing of this reevaluation underscores growing considerations within Treasury leadership about whether the current target remains optimal for economic conditions.

The implications of such a policy adjustment could reshape expectations around interest rates, monetary tightening cycles, and overall economic management strategies—factors closely watched by both traditional markets and the broader digital asset ecosystem.