The Federal Reserve recently adopted a two percent inflation target, reports Thomas Palley, AFL-CIO senior economic policy advisor. The Fed should be looking at policies that improve wages, not setting inflation rate targets, Palley writes In an Op-Ed published in the Economists' Forum blog titled, "The Fed's 2% Inflation Target Trap." 

Palley writes:

The two percent inflation target represents a cruel trap. The unemployment rate will eventually come down, and when it does the economy will bump against the Fed’s new self-imposed inflation ceiling. That ceiling likely coincides with an unemployment rate of six per cent or higher. Under the new policy regime, the Fed will then have reason to pull the trigger and raise interest rates, thereby trapping millions in unemployment and ensuring continuation of the second round of wage stagnation which began after the stock market bust of 2001…

Read the rest of Palley's Op-Ed here.