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Central BanksHigh Impact•13 February 2026•

1 min read

BCA Research: Fed Might Raise Inflation Target to 2.5-3.5% Under Warsh

A man in a suit and glasses speaks at a podium with "John C. Williams, President, New York Federal Reserve" text. The background is golden with glowing data graphics and a cityscape. Text overlays rea

BCA Research suggests a potential structural shift in Federal Reserve policy, indicating that Kevin Warsh could advocate for raising the inflation target to a range of 2.5% to 3.5%. This move would represent a significant departure from the long-standing 2% target, aimed at sustaining economic expansion. Analysts note that the US labor market has reached a state of equilibrium, with both supply and demand balanced at approximately 172 million workers. Under this scenario, the US yield curve is expected to experience a 'bear steepening' as market participants price in higher long-term inflation expectations. While such a policy shift could weaken the USD and pressure long-term Treasury bonds, it may provide a tailwind for equities and inflation-hedging assets like Gold. The strategy focuses on maintaining lower real interest rates to keep the economy 'hot' despite persistent price pressures.