The Federal Reserve's more than decade-long quest to generate a healthy level of inflation continues to fluctuate, even with the central bank's relief in 2019 specifically geared to the issue.
Not only has the Fed missed 2% targets for the entire year, but it now faces fading hopes that something will change at least in the next few years.
The projected inflation rate for the year from now is 2.3%, according to the New York Fed's consumer expectations survey released this week. While this number is technically ahead of the Fed's goals, it has consistently exceeded the actual level throughout its existence, often by a full percentage point or more.
October's reading represented a 0.2 percentage point decline to 2.3%, the lowest level ever in a survey dating back to June 201
Fed officials consider some inflation as good for the economy as it represents rising living standards. In their move to construct policies during and after the financial crisis, they reached the 2% target, even though they only surpassed it once, in 2011, using the personal consumption expenditure index minus food and energy prices as a guide. The latest reading showed that the PCE deflator rose at a mere 1.7% pace in September.
Evans wants the Fed to be "aggressive"
Some central bank executives have been pushing for a more active approach.
"It is very difficult to generate inflation in today's environment," said Chicago Fed President Charles Evans during a talk Wednesday in New York at the Council on Foreign Relations. "We have to work hard to understand this and be aggressive."
Evans supports an approach where the Fed allows inflation to run above the 2% threshold for a while – and stands behind the Federal Open Market Committee's approval of a "symmetrical" measure where inflation may be slightly warmer or slightly colder than the target for a period of time. . "It would be good if the FOMC clarified that in some of our discussions about our long-term strategy," he said.
Making the target a fixed 2%, he added, could send an incorrect message about the Fed's intentions that it could begin to tighten policy as inflation gets closer to that figure.
"If you limit yourself, if you say your goal is 2%, but you really behave as if it's a cap, it reduces the monetary space when you need to provide more monetary accommodation during a downturn," he said Evans.
Evans is a voting member of the FOMC and has approved all three interest rates this year. The committee has cited low inflation as a factor in each of the moves.
Minneapolis Fed President Neel Kashkari weighed in on the matter during a CNBC interview Monday, saying that the FOMC would announce that it will keep rising until inflation hits 2%.
The stock market likes it
sure, some meters show that the 2% target is within reach.
The Dallas Fed's 12-month trimmed average for PCE inflation indicates 2.1% inflation, while the six-month trimmed average is 2.2%. (The "trimmed" measure takes extremes in measurements.)
Similarly, the Atlanta Fed's "sticky price" core consumer price index, which includes goods that show relatively lower fluctuations, is up 2.6% year-over-year  However, a proprietary measure from Goldman Sachs shows inflation of around 1.85%.
Politicians thus hold on to push inflation higher, and there has been good news for the stock market. When Fed chairman Jerome Powell said last week it needed a "really significant" increase in inflation before interest rates began to rise again, it "played a big role" in the market effort since, said Bespoke Investment Group founder Paul Hickey.
"It was almost equivalent to your parents telling you on a Friday that they were going away for the weekend and would not be back until Monday at the earliest. In other words, celebrate this weekend!" Hickey wrote Wednesday. However, he also noted that seven out of eight inflation indicators that outline tracks show that, "Not only are most inflation readings below the Fed's target level, but they are also moving down rather than upward."