At his second press conference, Chairman Bernanke was asked whether the Fed would ever institute an explicit numerical inflation-targeting policy. In responding, he confessed he has always been a fan of that type of monetary policy. Recent adjustments in some of the Fed’s communications suggest that the Chairman may be gaining a few more Federal Open Market Committee (FOMC) participants on his side. Adopting an inflation target is a topic that has gotten a lot of attention lately, and a review of the Committee’s most recent minutes and the public discourse should help shed some light on why.
The minutes of recent FOMC meetings show that at least some FOMC members have been considering the costs and benefits of an explicit inflation target as an official policy goal. As expressed in the minutes, “a few participants noted that the adoption by the Committee of an explicit numerical inflation objective could help keep longer-term inflation expectations well anchored.” This statement is not a new development, however, as it has appeared in each of the last three sets of minutes published. Perhaps more important was a change in the Chairman’s interpretation of the Committee’s inflation projections.
In the past, the Fed has argued that in order to maintain price stability—one half of its dual mandate—it must achieve a rate of inflation that is consistent with the mandate over the medium term. Until recently, this rate was not specified but was implicitly understood by market participants to be 2 percent, or just a little bit less. Because inflation is approaching that level and economic growth is still below its long-run trend, some contention has emerged as to whether the Fed will stick to that implicit, mandate-consistent target or let inflation rise to spur growth.
The number of people living in urban neighborhoods has been rising in recent decades. This Commentary investigates changes in the number, ages, and financial status of those who have been moving into and out of urban neighborhoods, using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel. I find that since 2000, the
increase in urban populations is the result of young adults migrating into urban neighborhoods and senior citizens aging in place. Urban populations have also become more educated and well to do. While declining urban neighborhoods may still outnumber growing urban neighborhoods within some regions, urban leaders there can work toward population or tax base growth knowing that consumer tastes and national trends are favorable to those goals.
Urban areas seem to be enjoying a renaissance of sorts due in part to the many young professionals who have moved into central neighborhoods since the 2000s. Many of these young professionals are thought to move back out after they have started families, but the details of these migration patterns are not well-known. I analyze data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel to answer 12 questions about these temporary
urbanists—those who choose to move into an urban neighborhood and spend part of their early adulthood there.
The economic conference will provide researchers from academia and central banks an opportunity to exchange new ideas on modeling inflation and inflation expectations and their relationship to the macroeconomy.