There have been two interest rate hikes now by the US Fed while their target inflation measure, the personal consumption expenditures price index (PCEPI) has had an inflation rate well under the two percent target rate. Their preferred core inflation measure, PCEPILFE, has been tracking higher but still under two percent. Now three rate hikes are planned for 2017 even though the median forecast of FRB members and FRB presidents is inflation of just 1.9% for 2017 and 2.0% for 2018 for both PCEPI and PCEPILE. It could be that the US Fed is, on a de facto basis, targeting the CPI-U, which is tracking somewhat higher than the PCEPI. More likely, as Ed Harrison suggested, it is treating 2.0% not as a target rate but as an upper bound for inflation. The US Fed should formally declare that it is targeting a lower inflation rate. There is less upward substitution bias in their inflation measure than in any other inflation measure targeted by a central bank. A 2.0% target rate is too high.