I struggle and struggle to understand the fear of near-term, rapid inflation that is being stoked by the likes of commentators noted here and here. This struggle becomes even more profound when I examine actual data.
Category Archives: inflation
Core at Zero
At least, month-on-month. Three month annualized inflation — either PCE or CPI — both under 0.5%:
Billion prices project
Justin Lahart is among those calling attention to the Billion Prices Project of MIT Professors Roberto Rigobon and Alberto Cavallo.
Jeffrey Frankel on QE2, Inflation Hysteria and Actual Facts
Recalling President Reagan’s statement, “Facts are stupid things”, it’s no surprise that the disinformation campaign arguing that the Fed has been pressured into engineering a bout of high inflation continues. Jeffrey Frankel helps bring some facts to the table. From “The pot again calls the kettle red: Republicans, Democrats, the Fed and QE2”.
Inflation Fears and Measures of Expected Inflation
Recent news items have noted the fears of several individuals that QE2 will spark rapid inflation, e.g. [1]. For instance, Representative Paul Ryan, expected to become the Chairman of the House Budget Committee in January, stated: “I think it’s going to give us a big inflation problem down the road.”
Here are what various market-based indicators suggest.
Commodity inflation
I guess now we know that the Fed has the tools to prevent deflation.
QE2: Been there, done that
The Federal Open Market Committee announced today that:
the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.
Negative real interest rates
What message should we take from negative real interest rates?
Arguments against QE2
Having earlier reviewed some of the reasons in favor of additional quantitative easing (QE2), I’d like to acknowledge some of the dissenting views.
More than one tool for the Fed
One theme that emerged from the monetary policy conference at the Federal Reserve Bank of Boston on Friday and Saturday is that, as I stressed in my discussion of the recent FOMC minutes, the Fed is not thinking of large-scale asset purchases as the only tool available in the current environment.