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Illustration: Eniola Odetunde/Axios

Today is a truly historic day in Fed history — one that will have a transformative effect on U.S. monetary policy for the foreseeable future.

Driving the news: For decades, the main job of central banks has been to keep inflation down. The Fed has now effectively changed that policy, to instead prioritize maximum employment.

  • What they're saying: "Following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time."

Between the lines: Fed attitudes towards inflation have been evolving steadily in recent years, as it has stubbornly refused to tick up even during periods of full employment.

  • Today's announcement marks the end of the Fed worrying that employment can sometimes be too high.
  • Before today, the Fed was charged with assessing "deviations" from maximum employment — either to the upside or to the downside. Now, the Fed will only look at "shortfalls" from that level.
  • It's an admission that an economy can never have too much employment.

The big picture: The biggest change is that if the Fed expects inflation, it now no longer needs to raise interest rates. Instead, it can wait and see whether inflation actually arrives, and act only then.

Go deeper: The Fed's messaging around this move is exemplary. There's a simple and clear press release, a major speech from Jay Powell, a detailed policy statement, and then a collection of a dozen different papers all filling out the details of the thinking that went into the new policy.

The bottom line: This news represents a radical change in how the Fed thinks about its job. It will provide powerful ammunition should ECB president Christine Lagarde want to start trying to make similar changes.

Go deeper

Dion Rabouin, author of Markets
Dec 4, 2020 - Economy & Business

San Francisco Fed chief says Fed must do better on inequality

San Francisco Fed president Mary Daly. Photo: Nick Otto/Washington Post via Getty Images

While the Fed chair has downplayed and even denied the central bank's role in ratcheting up income inequality and the K-shaped recovery, other Fed members are taking responsibility and calling for change.

What happened: San Francisco Fed president Mary Daly took the subject head-on in a speech earlier this week, saying the Fed "will need to do more to ensure that the benefits of low interest rates and rising asset valuations can spread widely throughout the economy."

Trump nominee Christopher Waller confirmed to Fed board

Christopher Waller at a Senate Banking hearing earlier this year. (Photo: Sarah Silbiger/Getty Images)

The Senate voted 48-47 on Thursday to confirm Trump nominee Christopher Waller to the Federal Reserve Board of Governors — filling one of the two vacant slots on the influential economic body.

Why it matters: It's one of the last marks left on the Fed board by Trump, who has nominated four of its six members (five including Jerome Powell, who was elevated to chairman under Trump).

N.Y. Times faces culture clashes as business booms

Illustration: Sarah Grillo/Axios

New York Times columnist David Brooks' resignation from a paid gig at a think tank on Saturday is the latest in a flurry of scandals that America's biggest and most successful newspaper company has endured in the past year.

Driving the news: Brooks resigned from the Aspen Institute following a BuzzFeed News investigation that uncovered conflicts of interest between his reporting and money he accepted from corporate donors for a project called "Weave" that he worked on at the nonprofit.