Laura Banks
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The Fed’s Janet Yellen could use some target practice

MarketWatch photo illustration/Getty Images, Everett Collection

Federal Reserve Chairwoman Janet Yellen

Ever since the Federal Reserve adopted an explicit inflation target of 2% in 2012, the central bank has had limited success in hitting it. Only once, in fact, in the months between April 2012 and today, did the year-over-year increase in the personal consumption expenditures (PCE) price index breach 2%. Any reader of the Fed’s post-meeting statement and subsequently released minutes can’t help but notice the array of explanations attached to this chronic undershoot. The decline in oil prices has had a “transitory” effect on inflation … for years now. Most recently, inflation was depressed by declines in the prices of wireless-telephone services and prescription drugs, which the Fed labeled “idiosyncratic.”