In historic shift, Fed sets inflation target

Reuters News
Posted: Jan 25, 2012 2:08 PM

(Reuters) - The Federal Reserve took the historic step on Wednesday of setting an inflation target, of 2 percent, a victory for Chairman Ben Bernanke that brings the Fed in line with many of the world's other major central banks.

The U.S. central bank, in its first ever "longer-run goals and policy strategy" statement, said it was not appropriate to adopt a fixed goal for employment, however, because the labor market is not largely determined by monetary factors.

The Fed said the 2 percent target - measured by the annual change in the price index for personal consumption expenditures - is the most consistent over the long run with its mandate, adding it should help keep longer-run inflation expectations "firmly anchored."

(Reporting by Jonathan Spicer and Ann Saphir; Editing by Padraic Cassidy)