The Federal Open Market Committee (FOMC) met on May 1-2, 2018. Its closely watched statement included the passage: “Inflation on a 12-month basis is expected to run near the Committee’s symmetric 2 percent objective over the medium term.”

The term “symmetric” was a new addition to the communication. For those who have forgotten their high school geometry lessons—or for artists unsure how a visual descriptor applies to inflation rates—the idea is that the target inflation rate is not a hard ceiling. This seemingly subtle change of phrasing is an attempt by the FOMC to set market expectations as inflation readings exceed 2%.

Few expect the price level to accelerate uncomfortably; there are too many secular governors to overcome. Nonetheless, as the demand side of the American economy continues to grow faster than the supply side, some additional inflation is to be expected. And that should prompt the FOMC to continue the recent trend of moderate interest rate increases.

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