What did Scott Bessent actually propose?

He suggested the Fed consider replacing its single 2 percent goal with an inflation target range, such as 1.5 to 2.5 percent or 1 to 3 percent, but only after inflation is firmly back at 2 percent. The idea would add flexibility while preserving an anchor for expectations.

How could a range affect German bond investors?

If a band reduces the risk of abrupt hikes during small overshoots, US term premia may ease. Bund yields often move with Treasuries, so German duration could benefit. That can lift bond prices modestly and reduce volatility, though ECB policy and euro area data still dominate euro curves.

What does this mean for the euro and exporters?

A steadier US policy path could narrow dollar swings, helping EUR stability. That can lower hedging costs and smooth imported inflation, especially for energy inputs. Exporters may gain from reduced FX volatility and clearer financing conditions, even as margins still depend on global demand.

Is the Fed changing its target now?

No. The Fed’s current goal remains 2 percent. Bessent’s comments point to a possible review only after inflation is durably at target. Markets price probabilities ahead of time, so investors should watch core PCE, FOMC projections, and speeches for clues about timing and scope.

Global Market Insights

December 24: Fed 2% Target Debate Heats Up as Bessent Backs Range

ByHuzaifa Zahoor December 24, 2025December 24, 2025

The Fed 2% inflation target is back in the spotlight after Scott Bessent floated a future shift to an inflation target range. He suggested 1.5 to 2.5 percent or 1 to 3 percent once price growth is firmly at 2 percent. This debate matters for German investors. A new Federal Reserve policy framework would alter rate expectations, global bond yields, and equity valuations. We explain why the idea is gaining traction and what it could mean for EUR markets and portfolios in Germany.