Merler, Silvia, (2017), “The Fed’s problem with inflation”, Brugel, 19 June
Joseph Gagnon at PIIE argues that the FOMC meeting offered three unexpected items. First, Chair Yellen pointed to “one-off” development in the prices of mobile phone service plans and pharmaceuticals in March, as the main reason the FOMC’s preferred measure of inflation has moved away from its 2 percent target to 1.5 percent as of April. Gagnon wonders whether the FOMC is revisiting the bad old days of the 1970s, when it tried to explain away inflation that was too high by pointing to a seemingly endless stream of one-off factors. Second, the FOMC announced the details of how it would begin to gradually shrink its balance sheet and said the process likely would start sometime this year.
Relevant Posts
- Andersson, Fredrik, Jonung, Lars, (2017), «Inflation targets and the benefits of an explicit tolerance band», Vox Eu, 8 May
- Karadi, Peter, (2017), «The ECB’s announcements of non-standard measures and longer-term inflation expectations», European Central Bank Research Bulletin No. 33, 18 April