Over the last month, a consensus seems to have emerged that (1) the Fed has the ability to depress long-term yields further, and (2) the Fed has the intention to implement such measures. That raises the possibility that recent market moves represent a bet already placed by market participants on the basis of the logical implications of (1) and (2).
Category Archives: inflation
What’s the Fed signaling?
There’s an aspect of Tuesday’s statement from the FOMC that’s not being emphasized by many analysts.
Will the Fed do more?
If conditions deteriorate further, I believe the answer is yes.
Persistent Large Output Gaps, Disinflation and Deflation
Or, what if the Accelerationist hypothesis doesn’t hold. I’m sure this question will drive some apoplectic — but I think it a reasonable question. First, let’s look at the empirical evidence on what happens to inflation in the wake of persistent large output gaps. Fortuitously, Andre Meier has just written on this subject, in Still Minding the Gap:
Ever so slightly less contractionary
What is the significance of yesterday’s statement from the FOMC?
From Disinflation to Deflation?
Options for monetary stimulus
The latest economic data have surely warranted a downward revision in the Federal Reserve’s assessment of near-term economic performance. It therefore might be a good time to review the steps the Fed could take if it wishes to provide further economic stimulus.
Fighting deflation
The Bureau of Labor Statistics reported Friday that the seasonally adjusted consumer price index declined in June to the lowest level since November. When we start to talk about the level of the CPI rather than its rate of change, you know that deflation could once again become a key concern.
Still in Search of Inflationary Expectations
Given concerns about large budget deficits and quantitative easing feeding into inflation even as actual inflation was falling, I wondered what standard measures indicated. This follows up on the same question I posed in May of last year.
Inflation or deflation?
For the last year and a half my assessment has been that the near-term pressures on the U.S. economy were deflationary, while long-term fundamentals involve significant inflation risks. It’s time for a look at the data that have come in over the last 6 months, and time to say that I still see things exactly the same way.