Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)
New York Fed,
2021
Recommendation
Supply-chain bottlenecks, energy shortages and surging demand in a post-COVID-19 world have ignited inflation fears. But the assumption “that expected inflation is a key determinant of actual inflation” is getting pushback from Federal Reserve economist Jeremy B. Rudd. In this contrarian analysis, he examines the basis of the inflation-expectation hypothesis and its efficacy in predicting price dynamics. Economists, policy experts and executives will find a timely and insightful look at inflation mechanics in this cutting-edge report.
Summary
About the Author
Jeremy B. Rudd is a senior advisor for the Board of Governors of the Federal Reserve.
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