Pick your poison: For Fed, it's higher inflation or an inevitable return to quantitative easing

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Pick your poison: For Fed, it's higher inflation or an inevitable return to quantitative easing
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The Great Recession ended a decade ago this month, but for the U.S. Federal Rese...

WASHINGTON - The Great Recession ended a decade ago this month, but for the U.S. Federal Reserve the fallout has posed an era-defining choice: Either jolt Americans to expect higher inflation, or keep the printing press ready for the next economic slide.

The other would leave the Fed’s current approach to inflation intact but means the next recession will likely require the bondbuying and unconventional strategies used to combat the last one, with less certain results and a political cost for the Fed. Attention has centered on whether the Fed should make its 2% inflation target a goal to be reached on average.

The Fed’s policy rate has been mired as well, currently in a range of 2.25% to 2.5% and unlikely to go higher. That is below historical averages, leaving the Fed less room to bolster the economy by cutting rates before it hits the zero lower bound and has to trot out the bond purchases and other tactics used to fight the 2007-2009 recession.

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