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Photo: Federal Reserve via Getty Images

The Federal Reserve said Thursday that, going forward, it is willing to allow inflation to drift higher than its typical 2% target for periods of time — and won't be tempted to hike rates to offset rising prices when the unemployment rate gets too low.

Why it matters: It's a historic shift in the Fed's strategy. For decades, the central bank operated with the thinking that low unemployment rates lead to inflation. That never panned out during the record-long economic expansion that ended when the pandemic hit, as inflation has remained persistently below its target since the financial crisis .

  • Federal Reserve Chairman Jerome Powell made the announcement at the Fed's annual conference in Jackson Hole, held virtually for the first time.
  • "A robust job market can be sustained without causing an outbreak of inflation," Powell said.

Between the lines: The announcement may seem like it's coming at a strange time, when unemployment is the highest it's been in years. But it's the highly-anticipated result of a policy review the central bank announced it would do two years ago.

Go deeper

Biden to nominate Janet Yellen as Treasury secretary

Photo: Photo by Alex Wong/Getty Images

President-elect Joe Biden is preparing to nominate former Fed Chair Janet Yellen as his Treasury Secretary, four people familiar with the matter tell Axios.

Why it matters: Yellen, 74, will bring instant economic celebrity to Biden’s team and, if confirmed, she will not only be the first female Treasury Secretary but also the first person to have held all three economic power positions in the federal government: the chair of Council of Economic Advisers, the chair of Federal Reserve and the Treasury Secretary.

Nov 22, 2020 - Politics & Policy

Trump campaign says Sidney Powell isn't a member of its legal team

Photo: Drew Angerer/Getty Images

President Trump's campaign said in a Sunday statement that Sidney Powell is neither a member of its legal team nor a lawyer for Trump in his personal capacity.

Why it matters: Powell was a part of the campaign's wild, conspiratorial Thursday press conference and baselessly floated unfounded conspiracy theories that included a claim that President-elect Biden won the 2020 presidential election thanks to "communist money" from the Venezuelan regime.

Scoop: Trump tells confidants he plans to pardon Michael Flynn

Photo: Alex Wroblewski/Getty Images

President Trump has told confidants he plans to pardon his former national security adviser Michael Flynn, who pleaded guilty in December 2017 to lying to the FBI about his Russian contacts, two sources with direct knowledge of the discussions tell Axios.

Behind the scenes: Sources with direct knowledge of the discussions said Flynn will be part of a series of pardons that Trump issues between now and when he leaves office.