Empirical studies find that the link between inflation and economic slack has weakened in recent decades, a development that could hamper monetary policymakers as they aim to achieve their inflation objective. We show that while the role of economic slack has diminished, economic growth has become a significant driver of inflation dynamics, indicating that the link between inflation and economic activity remains but the relevant gauge of activity has changed. The new evidence suggests that the COVID-19-related recession could induce substantial disinflationary pressure. Read More
Upcoming EventsSEE ALL
The Federal Reserve Bank of Cleveland and the Office of Financial Research will hold the 2020 Financial Stability conference on November 19-20, 2020, in Cleveland, OH.