Peter Schiff Says Fed May Have 'Secretly Given Up' 2% Inflation Target: 'New Unspoken Mandate Will Be ...'

The all-important consumer price inflation report for August will drop in on Wednesday and the number is closely watched by Street, given its implication for the Federal Reserve monetary policy.

Gold bull Peter Schiff, however, has a differing opinion on the data's significance.

What Happened:  “It's likely the #Fed has already secretly given up its 2% #inflation target,” Schiff said in a post on X, formerly Twitter. The central bank may now quietly drop price stability as a mandate, the economist said.

“Its new unspoken mandate will be to finance exploding Govt. debt and forestall a financial crisis, no matter how high inflation rises as a result,” he said.

The Federal Reserve's dual mandate in formulating the monetary policy is to “promote effectively the goals of maximum employment and stable prices.”

The criterion for stable prices has been agreed upon as a 2% core annual inflation rate since the 1990s and the target was formally introduced in 2012.

Economists including Nobel laureate Paul Krugman have argued for shifting to a higher inflation target, reasoning that the move will cushion the economy against severe recessions.

See Also: Best Inflation Stocks

What’s Next: The Bureau of Labor Statistics August CPI report due Wednesday is expected to show an acceleration in consumer price inflation rate from 0.2% in July to 0.6% in August. The monthly rate of the core consumer price inflation that excludes food and energy is expected to remain unchanged at 0.2%.

The annual rate of consumer price inflation is expected at 3.6% in August, up from the 3.2% rate in July. The core annual rate is expected to slip from 4.7% to 4.3%.

The Federal Open Market Committee, the monetary policy-setting committee of the central bank, is set to meet for two days beginning on Sept. 19 to decide on the Fed funds rate. The futures market has priced in a 93% probability of a Fed pause at 5.25%-5.50%.

The iShares TIPS Bond ETF TIP, an exchange-traded fund that tracks the investment results of an index composed of inflation-protected U.S. Treasury bonds, ended Tuesday’s session up 0.05% at $105.40, according to Benzinga Pro data.

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