It contains a number of important ideas – and indeed I encourage all Americans to read the entire statement – but I’ll stress three main elements. The first element is that the framework statement explicitly translates the words “price stability” into a longer-run goal of a 2 percent annual inflation rate.
Here, the term “inflation rate” refers specifically to the personal consumption expenditures (or PCE) inflation rate. This is a measure of the rate of increase in the prices of all goods and services, including those related to food and energy.