US expectations key influence on inflation - San Francisco Fed paper

UK inflation

Since the great recession, US inflation has been driven primarily by price expectations rather than labour market conditions, an economic letter published by the San Francisco Federal Reserve argues.

The results highlight “new risks” to standard monetary policy practice, Òscar Jordà et al say. “It suggests that conducting policy consistently to keep expectations well-anchored to the target is key to avoiding large swings in inflation.”

The researchers use a model to analyse the contributions

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