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• Inflation, part of the Fed's price-stability mandate, has remained below the Fed's 2% objective throughout Chair Janet Yellen's term. Yellen has called this a "mystery."
• According to Rick Reider, BlackRock's global chief investment officer of fixed income, the new Fed chair need not be too concerned about this target. 
• Inflation is being held down by secular factors including technology, which are beyond the Fed's scope.
• "To try and create 2% [inflation] is actually going to hurt the economy through consumption, and particularly lower-to-middle income parts of the pocket where that inflation, particularly bad inflation, can really hurt," Rick Rieder, BlackRock's global chief investment officer of fixed income, said.

Federal Reserve Chair Janet Yellen is set to leave the helm of the central bank without hitting one of its key targets. 

For five years, inflation hasn't moved above the Fed's 2% target, as measured by the year-on-year growth rate of core personal consumption expenditures. That's the Fed's preferred gauge that excludes unstable food and energy prices. 

There are at least two reasons why this could be considered problematic: it hurts the credibility of the Fed's target, and reflects weak wage growth. But it's not a target that Jerome Powell, President Donald Trump's nominee for chairman, would need to be too concerned about, according to Rick Rieder, BlackRock's global chief investment officer of fixed income.

"The world always focuses on two — it's not just the number," Rick Rieder told Business Insider. "It's the construct of inflation, and much of it is outside the scope of what the central bank can do," he told Business Insider. 

Rieder added that the Fed's mandate is not 2% inflation, but price stability. That means the Fed can allow inflation to run just under 2% or even at 1% if the economy is growing, he said. 

There's a difference between good inflation and bad inflation 

Fed officials expected that as more people joined the labor force, the increased demand would help lift inflation. But that relationship, characterized by the Phillip's curve, has broken down, prompting some in the Fed including Yellen to call low inflation a mystery. 

They've also noted that better technology is one secular reason why inflation is low.

Cheaper cellphone service and gas are among some of the factors they consider temporary. These consumables are examples of items Rieder groups together as being part of bad inflation. People in the lowest quintiles of income distribution spend a larger share of their incomes on them, and benefit when they're cheaper. 

"If bad inflation is staying down, that is actually great for the consumer, and it's great for consumption," Rieder said. 

Good inflation, on the other hand, reflects price increases that are spurred by a strengthening economy and labor market. They, in turn, can drive further improvement and include medical care and housing. 

"To try and create 2% [inflation] is actually going to hurt the economy through consumption, and particularly lower-to-middle income parts of the pocket where that inflation, particularly bad inflation, can really hurt," Rieder said. 

Powell, for his part, is unlikely to overstress about low inflation. In public comments this year, he said it was important for the Fed to show commitment to its 2% objective. But low inflation also allowed the Fed to raise interest rates slowly. 

Fed officials have said that fiscal stimulus, which includes tax cuts, represent an upside risk to the economy that could accelerate inflation. But according to Alessio de Longis, a portfolio manager at OppenheimerFunds, there's not much chance of inflation suddenly getting "out of control."

"If you look into history, inflation is a gradual economic process and it really got out of control only in the '70s. Those two episodes of oil shocks represented an anomaly compared to the long-term history."

SEE ALSO: Jerome Powell's Fed tenure is unlikely to be a smooth sail

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• President Donald Trump has landed in Japan, the first Asian country he is visiting during his 12-day tour of the region.
• He is meeting with Prime Minister Shinzo Abe, who will host the US president for a meeting with families of Japanese citizens abducted by North Korea. Trump is also meeting with American and Japanese service members.
• Longstanding US allies in the Asia Pacific like Japan will likely be looking for signs of continued American support from Trump amid the ongoing North Korea crisis, especially since he pulled out of the Trans-Pacific Partnership trade agreement.
• Trump called Japan a "warrior nation" the day before he left for his trip.

US President Donald Trump has landed in Japan, the first Asian country he is visiting during his 12-day tour of the region.

Trump already golfed and dined with Prime Minister Shinzo Abe, who will host the US president for a meeting with families of Japanese citizens abducted by North Korea. Trump is also scheduled to meet with American and Japanese service members, and said shortly after landing that "it's expected" he'll meet with Russian President Vladimir Putin on the trip.

North Korea will undoubtedly be one of the topics discussed by Trump and Abe. During a congratulatory call after Japan's recent snap elections,  the two leaders reportedly discussed being united on the need to increase pressure on the regime.

Overall, Trump's Asia tour aims to "underscore his commitment to longstanding United States alliances and partnerships, and reaffirm United States leadership in promoting a free and open Indo-Pacific region," the White House said.

But there are concerns in Asia about the degree to which the Trump administration is genuinely committed to the economic prosperity and security of the region, given Trump's sharp policy shifts from the previous administration.

Longstanding US allies in the Asia Pacific like Japan will likely be looking for signs of continued American support from Trump, especially since the American president pulled out of the Trans-Pacific Partnership (TPP) agreement, which was largely seen as a statement about the US's long-term commitment to the region.

Trump calls Japan a 'warrior nation'

The day before he departed for his trip, Trump called Japan a "warrior nation" and said China might have a "big problem with Japan pretty soon" over North Korea in an interview with Fox News Channel's "The Ingraham Angle."  

"Well, you know Japan is a warrior nation. And I tell China and I tell everyone else that, listen, you’re going to have yourself a big problem with Japan pretty soon if you allow this to continue with North Korea," Trump said during the interview.

He said that "of course" Japan is worried about North Korea and that "they should be worried. You know, they're very close to North Korea." But he also added that "China has been helping us" with the North Korea crisis.

Japan has formally been a pacifist nation since the end of the World War II. Japan's constitution, which came into effect in 1947 after the war, includes an article (which the US pushed to be added) that renounces war as a sovereign right of the nation and the threat or use of force as a means by which to settle international disputes. But Abe has made efforts to "remove pacifist constraints" on the military.

His ruling coalition recently won a more than two-thirds majority in snap elections. Abe is now set to be the longest-serving prime minister in postwar Japan, and is expected to use his new mandate to push for changes in the country's defense strategy, according to CNN.

His defense agenda has, arguably, been helped forward by the ongoing North Korea crisis, even though about half of poll respondents in Japan disagree with revising the pacifist clause. It's possible that if the US appears to pull out of regional disputes in Asia, Abe might be inspired to move his defense agenda forward.

'Indo-Pacific' versus 'Asia-Pacific'

Interestingly, Washington has long referred to the region the president is visiting as the "Asia-Pacific," but the Trump administration has instead opted to call it the "Indo-Pacific."

The AP suggested it might be an attempt to create more distance between Trump and his predecessor Barack Obama and his "Pivot to Asia" strategy, but the switch could also suggest that the administration wants to highlight that the region is more than just China's backyard. In fact, recently Secretary of State Rex Tillerson spoke about expanding ties with India, who had seen some tensions with China earlier this year, and about partnering with allies like Australia and Japan, as the AP notes.

However, it's notable that the moniker "Indo-Pacific" doesn't come with a unified economic plan. This is in contrast to the Trans-Pacific Partnership, which was supposed to lower tariffs for 12 countries around the Pacific Rim, including Japan and Mexico but excluding China. The trade agreement was negotiated under the Obama administration as an arm of its "Pivot to Asia," before the Trump administration announced its withdrawal.

SEE ALSO: All the countries Trump will visit in Asia — and what he'll encounter when he gets there

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The Vatican is soon to host an address on how bitcoin and other cryptocurrencies are being used in the modern-day slave trade. To be held today at the Pontifical Academy of Social Sciences (PASS) in the headquarters of the Roman Catholic Church, the talk by Bank of Montreal senior manager Joseph Mari is to provide […]

• 60% of firms will trigger contingency Brexit plans if the government fails to secure a transition deal by March 2018, according to a new survey
• That could involve moving staff or slowing recruitment.
• "Currently, we see one major challenge – not Brexit itself ... But the approach to Brexit," CBI president Paul Drechsler will warn on Monday.

LONDON — Up to 60% of firms will trigger Brexit contingency plans within months if the government fails to secure a transition deal, according to a new CBI survey.

The survey found that 60% of firms will have triggered contingency plans by March 2018 if there are no transitional arrangements in place, which would involve moving staff abroad or slowing recruitment.

Prime Minister Theresa May favours a transitiona arrangement after Article 50 during which Britain's trade and regulatory relationship with the EU would largely continue, but stalled negotiations and political chaos in her own cabinet have so far prevented the speedy progress that is needed to facilitate a deal.

"A prime-time soap opera"

In a speech to 1,000 business leaders in London, CBI president Paul Drechsler will warn the government's approach to Brexit is harming business and dampening confidence.

"Currently, we see one major challenge – not Brexit itself: we’re 100% committed to making a success of it. But the approach to Brexit," he will say.

"We need a single, clear strategy. A plan for what we want, and what kind of relationship we seek with the EU."

"At the moment, I’m reminded of a prime-time soap opera, with a different episode each week. First Lancaster House, then article 50, the European Council, two dinners with Juncker – and no doubt many exciting instalments to follow.

"“But time is of the essence. We must leave behind the episodic approach and take this opportunity to move forward as one – business and politicians, here and abroad."

"Brexit is only 508 days away ... The clock is ticking," he will say.

The question of whether Britain will need a period of transition following Brexit day was a hot topic of debate within the Conservative Party leading up to the prime minister's keynote Florence speech.

Chancellor Philip Hammond made the case for transition. However, some of the party's ardent Brexiteers were suspicious that transition was simply a euphemism for staying in the EU after March 2019.

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