Does it refer to inflation or FED?
"Quite how far it is prepared to go will depend on what Yellen noted was an assessment of "the potential costs that could be associated" with a higher inflation target. Such assessment, however, probably will not be ready during her term, which ends in February 2018."
Source:https://www.reuters.com/article/us-usa-Fed-inflation-analysis-idUSKBN19630N
You need to look further back in the quotation:
At 4.3 percent, the jobless rate is at a 15-year low, yet wage growth is weak and inflation has recently slipped further away from the Fed's goal.
Quite how far it is prepared to go will depend on what Yellen noted was an assessment of "the potential costs that could be associated" with a higher inflation target.
There are three possible "its": inflation, the jobless rate, and the Fed.
The clue is that an abstract statistic like inflation or the jobless rate cannot really be said to be "prepared". The Fed, being an organization, can at least metaphorically make preparations. A knowledge of the purpose of the Fed (to control both inflation and unemployment by manipulation of the money supply) would also suggest that the sentence is talking about that agency.
But the fact that the reader must do this level of analysis to resolve a pronoun is a sign of very bad writing.
