The right way to fight inflation is simply to convince Americans that they don’t have an inflation problem.

That’s the view of Johns Hopkins economist Laurence Ball, who believes the Fed should target inflation at 4% instead of the far more restrictive 2%.

“I think if people were used to a world of 4% inflation and that was the norm, they would not be especially unhappy about it,” Ball said, referring to Americans’ growing resentment of inflation since Covid.

According to Ball, policymakers should be more worried about recession than inflation, but they can’t because they’ve boxed themselves into a corner with an arbitrary inflation target.

The result is that instead of cheering the fact that inflation is down from a high of 9.1% to 3.4%, Americans are dwelling on 37 consecutive months of above 3% inflation.

As inflation crept back in recent months, the Fed has called off its expected rate cuts. Some Fed officials have even left the door open to higher interest rates.

According to Nobel Prize-winning economist Joseph Stiglitz, that would be a mistake. In his view, the Fed’s job isn’t to bring CPI back to 2% but rather to keep “inflation within guardrails.”

Can a higher inflation target help?

Economists argue that a higher inflation target would allow the Fed to set interest rates higher over time, giving it more leeway to cut when the economy needed a boost.

That would mark a major policy shift, considering that interest rates were near zero just a few years ago and any rate cuts wouldn’t have a meaningful effect.

The problem is that it would be difficult to convince the public that higher inflation is acceptable or beneficial—especially when a majority of Americans blame inflation for most of their financial woes.

That’s why University of California, Berkeley economist Jon Steinsson believes that higher inflation targeting could work in theory but not in today’s economy.

In his view, economists haven’t done a good job of modeling how consumers would react to different targets.

“It may well be that people hate inflation for some reason that is good and valid,” he told the Journal. “It’s very plausible that we as a field haven’t really had a lot of success in modeling and articulating these costs.”

For now, the Fed remains deeply committed to its 2% inflation target. St. Louis Fed president James Bullard called 2% “an international standard” that, if abandoned, would have disastrous consequences.