Washington | The Federal Reserve has dumped its policy of deploying monetary policy to maintain 2 per cent inflation and will now turn a blind eye to greater price pressures in an effort to stoke spending, employment and investment.

Inflation will now be allowed to run "modestly" above the Fed's goal for "some time" if it has persistently fallen short, Fed chairman Jay Powell told this year's Jackson Hole symposium on Thursday (Friday AEST). This year's event has been turned into a virtual format because of COVID-19.