The Fed released the minutes from its last meeting yesterday, and one of the concerns is the return of inflation. Some Fed officials worried that if unemployment, currently at 4.7 percent, fell even further, it could pose a “significant upside risk” of higher inflation. The Fed's unemployment goal is 4.8 percent, and inflation has remained below the Fed's 2 percent inflation goal for several years.
Some Fed officials argued that the inflation target might be achieved by the end of this year. Others argued that since inflation had run below 2 percent for so long, it would do no harm to allow prices to rise above 2 percent for a time.
“Nearly all members judged that the committee has not yet achieved its objective for headline inflation on a sustained basis,” the minutes said. “A few members expressed the view that the committee should avoid policy actions or communications that might be interpreted as suggesting the committee's 2 percent inflation objective was actually a ceiling.”