The Federal Open Market Committee has approved significant updates to its Statement on Longer-Run Goals and Monetary Policy Strategy, marking a return to a more traditional monetary policy framework. In his recent address, Fed Chair Jerome Powell highlighted the adoption of flexible inflation targeting, maintaining a 2% inflation goal while emphasizing the importance of anchoring inflation expectations. The old policy that allowed for higher inflation has been erased, reflecting changes in the economic landscape. The Fed plans to revisit this framework in five years, considering its implications for inflation, policy credibility, and market stability. Powell noted that the new framework calls for a balanced approach, which may necessitate policy adjustments in the future.