(Reuters) – The U.S. Federal Reserve’s new framework for managing monetary policy shows a “tolerance” for higher inflation, but not necessarily a full-blown promise to engineer it, Kansas City Federal Reserve president Esther George said Thursday.

The Fed last month, as part of applying a new strategy to let inflation run higher in hopes of encouraging further job gains in a “hot” economy, said it would not raise rates until inflation has both reached its 2% target and is on track to “moderately exceed 2% for some time.”

“I interpret the revised consensus statement as a tolerance – and less as a promise to engineer,” higher inflation, George said, adding her voice to the disparate views among Fed officials about how the new framework will be applied in practice.

Minutes of that September meeting released on Wednesday showed a broad divergence of views on that front, and George, traditionally among the less tolerant of inflation and the financial risks loose monetary policy might generate, has placed herself in the camp that sees the new framework as less binding rather than more.

The new language in the Fed statement is “a message of patience” that the central bank will not react too fast to preempt inflation as it develops, George said. Indeed many analysts feel the Fed’s target interest rate will remain near zero for years to come.

However “it is not yet clear how much patience will be required,” George said, given that the pandemic may raise inflation more quickly than expected due to supply constraints, and particularly if a vaccine unleashes pent-up consumer demand.

“It will be difficult to assess the underlying pace of inflation until the dust settles,” George sad in webcast remarks to the Kansas Economic Outlook Conference at Wichita State University.

George also said she felt

Friday's report was compiled by BIS, the Bank of England, the U.S. Federal Reserve, Bank of Canada, Bank of Japan, the European Central Bank, Sveriges Riksbank and the Swiss National Bank. File Photo by Canadastock/Shutterstock/UPI

Friday’s report was compiled by BIS, the Bank of England, the U.S. Federal Reserve, Bank of Canada, Bank of Japan, the European Central Bank, Sveriges Riksbank and the Swiss National Bank. File Photo by Canadastock/Shutterstock/UPI

Oct. 9 (UPI) — The Bank of International Settlements and seven central banks around the world published a report Friday that set a framework for a digital currency to work in conjunction with paper money.

The report highlights three key elements of the proposal — cryptocurrency coexisting with cash in a flexible payment system, supporting wider policy objectives and promoting innovation and efficiency.

“This report is a real step forward for this group of central banks in agreeing on the common principles and identifying the key features we believe would be needed for a workable [central bank digitalcurrency] system,” Jon Cunliffe, the deputy governor for the Bank of England, said in a statement.

Along with BIS and Bank of England, the report was compiled by the U.S. Federal Reserve, Bank of Canada, Bank of Japan, the European Central Bank, Sveriges Riksbank and the Swiss National Bank.

The institutions said the core features of the digital currencies are that they will be resilient and secure to maintain operational integrity, convenient and available at a low or no cost to end-users, underpinned by appropriate standards and a clear legal framework and have an appropriate role for the private sector.

“While technology is changing the way we pay, central banks have a duty to safeguard people’s trust in our money,” European Central Bank President Christine Lagarde said.

“Central banks must complement their domestic efforts with close cooperation to guide the exploration of central bank digital currencies to identify reliable principles and encourage innovation.”

The report follows years of growing staying power among cryptocurrencies like Bitcoin and Facebook’s Libra.