JPMorgan’s most senior fixed-income executive has a blunt message for anyone still waiting for the Federal Reserve to bring inflation back down to its official target: stop waiting.

Bob Michele, the bank’s Chief Investment Officer for Global Fixed Income, Currency, and Commodities, told Bloomberg Television that the Fed’s 2% inflation target has become a “myth” in the eyes of financial markets. The United States has not actually reached 2% inflation in more than five years.

The stakes go beyond a single statistic. The 2% goal, formally adopted by the Fed in 2012 and measured by the Personal Consumption Expenditures price index, anchors expectations for wages, bond yields, and borrowing costs across the economy. If markets come to believe the central bank will quietly settle for a higher inflation rate, that anchor can loosen — affecting everything from mortgage rates to how firms set prices.

The new number is 2.5%

“We haven’t been there in half a decade,” Michele said during an April 9 appearance. “Two and a half feels like the new 2%.”

Michele supported the claim with JPMorgan’s own forecasts, projecting that headline and core inflation will land between 3% and 3.5% for 2026, with real GDP growth running at roughly 2.25%.

He is not a lone voice within JPMorgan’s research apparatus. David Kelly and Jacob Manoukian, both senior strategists at the bank, have advanced similar arguments throughout 2026. They coined the term “Teflon inflation” to describe the current environment: one in which prices remain elevated but never trigger the kind of wage-price spiral that would force the Fed into aggressive action.

The Fed says otherwise

Fed Chair Kevin Warsh has been unambiguous on this point. In multiple public addresses throughout 2026, Warsh has firmly rejected any suggestion that the central bank is softening its inflation objective. The 2% PCE target, he has insisted, is not flexible, not aspirational, and not open to quiet renegotiation.

That insistence reflects a central-banking precedent central to this debate: once a target is perceived as movable, restoring credibility typically requires tighter policy later — the dynamic that led former Fed Chair Paul Volcker to impose severe rate hikes in the early 1980s to break entrenched inflation expectations.

The data underscore the tension. Headline CPI reached 4.2% year-over-year in May 2026, driven partly by energy costs. Core inflation readings have persistently hovered near or above 3% across multiple reports this year. Core Personal Consumption Expenditures, the Fed’s preferred gauge, has been running around 3.3%.

JPMorgan’s strategists are not the only prominent voices raising the question. Bill Ackman flagged the issue in January 2026, arguing that structural forces would prevent a clean return to 2%. Jeffrey Gundlach made a similar case in July, pointing to AI-driven capital expenditure, persistent government deficits, and geopolitical friction as forces keeping a floor under prices. Both have suggested the Fed may drift toward a de facto target in the 2.5% to 3% range, whether or not it ever says so publicly.

How that gap resolves — between an official 2% objective and inflation persistently running a full point or more above it — is likely to shape the Fed’s rate path and market pricing of it in the months ahead.