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With the latter displaying relative vigor, the value of domestic imports was likely to continue to exceed that of exports by a substantial margin, thereby tending to perpetuate the large current account deficits that had worrisome implications for the future. | 2,003 | 1 |
Inflation in 1996, measured by the chain price index for GDP or the core CPI, was the lowest in 30 years. | 2,005 | 0 |
About the same time, Board staff developed the so-called P* (P-star) model, based on M2, which used the quantity theory of money and estimates of long-run potential output and velocity (the ratio of nominal income to money) to predict long-run inflation trends. | 2,004 | 2 |
Therefore, maximum employment (at least if interpreted as full employment or being at NAIRU) and price stability, the statutory mandate of the Federal Reserve, are compatible in the long run. | 2,008 | 2 |
For instance, in countries where sovereign or corporate debt levels are high, higher interest rates could increase debt-servicing burdens and concerns about debt sustainability, which could be exacerbated by currency depreciation. | 2,004 | 0 |
The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. | 2,002 | 2 |
First, we must be mindful that an unexpected slowdown might occur in the growth of productivity. | 1,999 | 1 |
This paper develops and estimates a habit persistence consumption asset pricing model in which the sign of the equilibrium covariance between equity and bond returns depends on the reduced-form correlation between inflation and the output gap, the correlation between the federal funds rate and the output gap, as well as the equilibrium persistence of inflation. | 1,999 | 2 |
By the same token, the effect of the interest rate channel on overall economic activity may be diminished by greater trade integration as changes in domestic demand are offset by induced changes in imports. | 1,997 | 2 |
Market-based measures of inflation compensation remained low; most survey-based measures of longer-term inflation expectations were little changed, on balance, in recent months. | 2,013 | 0 |
Nonetheless, those restraining influences were expected to abate over time and economic activity strengthen gradually. | 1,996 | 2 |
Such departures of expectations from perfect rationality can be an important source of observed inflation dynamics. | 2,004 | 2 |
Nonetheless, all but one of the members believed that in light of the uncertainties about the economic outlook, an immediate policy tightening was not needed in the absence of firmer indications that inflationary pressures might be emerging. | 2,014 | 1 |
In 1951, the Treasury-Federal Reserve Accord freed the Fed from the obligation to support Treasury bond prices. | 2,022 | 2 |
Many would ask what challenges could monetary policymakers possibly face in the U.S., given the remarkable combination of consistent above-trend growth and declining inflation? | 1,999 | 2 |
Some of the increase in sentiment and changes in asset prices could be tied to expectations of more expansive fiscal policy, another upside risk. | 2,017 | 0 |
For example, in the mid-1970s, just when the FOMC began to specify money growth targets, econometric estimates of M1 money demand relationships began to break down, predicting faster money growth than was actually observed. | 1,997 | 2 |
We expect the economy will continue to perform well, with the job market strengthening further and inflation rising to 2 percent over the next couple of years. | 2,015 | 2 |
Looking beyond the near term, the members anticipated that as the prevailing uncertainties began to diminish, the economy's resiliency abetted by broadly accommodative monetary and fiscal polices and the continuation of a strong uptrend in productivity would underpin a gradual economic recovery. | 2,004 | 0 |
The Committee took these actions to provide a somewhat more accommodative policy in response to muted inflation pressures and the risks to the outlook I mentioned earlier. | 2,005 | 0 |
With the boost from these factors fading, real GDP growth was projected to step down noticeably in 2023 and to be roughly equal to potential output growth in 2023 and 2024. | 2,007 | 0 |
Nonetheless, on balance, most members currently considered the upside risks to inflation to be a bit less pressing than those on the downside for the next few quarters. | 2,019 | 0 |
Further evidence that firms still have not fully adapted their operations to the latest state of technology also is provided in a recent study4 that attempts to measure the "technological gap"--that is, the difference between the productivity of leading-edge capital and the average productivity embodied in the current capital stock. | 2,021 | 2 |
I presented these estimates in my testimony to emphasize the continuing importance the profession attaches to NAIRU, the central tendency of current NAIRU estimates, and the absence of significant upward adjustments to estimates of trend growth. | 2,022 | 0 |
A number of global factors were seen as contributing to downward pressure on term premiums, including central bank asset purchase programs and the strong worldwide demand for safe assets. | 2,014 | 1 |
Based on historical experience, it seems improbable that all of the large rise in multifactor productivity could be attributed to cyclical or transitory factors. | 2,007 | 0 |
With respect to this particular part of the District, Jack may discuss Florida's citrus crop, the relative health of the tourism industry, and trends in Florida real estate prices. | 2,005 | 2 |
However, participants remarked that the actual rise in inflation was larger than anticipated, with the 12-month change in the PCE price index reaching 3. | 2,000 | 1 |
The possibility that longer-term inflation expectations may have edged down was roughly counterbalanced by the risks that somewhat firmer inflation this year could be more persistent than expected, particularly in an economy that was projected to continue operating above its long-run potential. | 2,012 | 1 |
Economic data releases were mixed, on balance, over the intermeeting period, but market participants were especially attentive to incoming information on the labor market--most notably, the private payroll figures in the employment report for May, which were considerably weaker than investors expected. | 2,016 | 0 |
One prominent example is the work in behavioral finance on how alternative assumptions regarding rationality can affect predictions for asset prices and saving behavior; another is the growing literature on the interaction of learning, inflation dynamics, and monetary policy. | 2,001 | 2 |
Survey and market measures of long-term inflation expectations did not suggest that the earlier higher inflation readings were going to persist. | 1,999 | 2 |
Participants judged that it would be appropriate to move the stance of monetary policy toward a neutral posture expeditiously. | 2,011 | 2 |
Trends in wages and prices have remained stable in recent months. | 2,015 | 2 |
The number of black-owned firms increased nearly 50 percent and the number of Hispanic-owned firms jumped 80 percent between 1987 and 1992--between two and three times the rate of growth of non-minority-owned firms. | 2,022 | 2 |
The Committee reiterated, however, that purchases were not on a preset course, and that its decisions about the pace of purchases would remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. | 2,009 | 2 |
While a preemptive tightening move might be warranted in the not-too-distant future to help contain inflationary pressures in the economy, these members believed that a symmetrical directive would best convey the message that no tightening action was contemplated for the weeks immediately ahead. | 2,017 | 1 |
While liquid deposits continued to grow slowly, heightened demand for safety and liquidity appeared to boost holdings of retail money market mutual funds. | 2,002 | 1 |
The high oil prices would themselves cut into demand growth and tend to stabilize the system. | 1,997 | 1 |
I would further say that I think it’s important to emphasize that we’re not going to mechanically take the interest rate projections that participants provide and just build policy off of that. | 2,016 | 2 |
Many of them expected that inflation was likely to rise gradually over the medium term, as resource slack diminished and inflation expectations remained stable. | 2,002 | 2 |
There is, in fact, an unusual discrepancy between the unemployment and capacity utilization rates, compared to previous expansions; that is, the capacity utilization rate is lower than would have been expected, based on past experience, at the prevailing unemployment rate. | 2,005 | 0 |
The second requirement contributes to the first and also to smoothing fluctuations in output around full employment. | 2,017 | 0 |
Their trade accounts tend to be in surplus, in some cases substantially, an indication that they are supplying more goods into the global economy than they are demanding. | 1,999 | 0 |
Business Caution As I discussed earlier, regression analysis suggests that the robust growth in profits and the comparatively modest recovery in capital expenditures leaves a good part of the extraordinary cash buildup unexplained. | 2,000 | 2 |
Total nonfarm payroll employment increased at a solid pace in October and November, and the unemployment rate declined, reaching 4. | 2,013 | 1 |
Consumer spending was projected to increase at a rate generally in line with the anticipated rise in disposable income; the favorable effects on household wealth of the advance that had occurred in stock prices and the ample availability of credit for most borrowers were expected to balance the damping effects of continuing consumer concerns about the adequacy of their savings, the security of their jobs, and the extent of their debt burdens. | 2,014 | 2 |
Some business executives reportedly believed that, with aggregate demand expanding robustly and the lower foreign exchange value of the dollar putting upward pressure on import prices, a degree of "pricing power" had returned. | 2,018 | 1 |
These forecasts and forward guidance had a significant effect on raising market interest rates, even though we did nothing with our primary policy tool, the federal funds rate, in December 2021. | 2,001 | 1 |
Although the unemployment rate edged up to 5. | 2,017 | 0 |
Indeed, financial services firms had already announced layoffs, largely reflecting mortgage market developments, the demand for temporary workers appeared to have softened, and the most recent weakening in construction employment was likely to continue for a while. | 2,022 | 0 |
First, the projected rates of productivity gains and potential output growth over the medium term were trimmed. | 2,014 | 0 |
Indicators of supply and demand conditions for small business credit were generally unchanged over the past quarter, with demand appearing to remain weak. | 2,014 | 2 |
The civilian unemployment rate was 4. | 2,020 | 2 |
Nonetheless, with fiscal policy assumed to be tighter next year than this year, the staff anticipated that real GDP growth would not materially exceed increases in potential output in 2013. | 1,996 | 2 |
Additionally, by depressing perceived rates of return abroad, the weakness in foreign demand explains a considerable portion of the run-up in the dollar, as shown in figure 4. | 2,001 | 0 |
For example, Kozicki and Tinsley (2001) show that it is far easier to make sense of the term structure of Treasury yields if one assumes that expectations about long-run inflation adjust in a reasonable adaptive manner. | 2,004 | 2 |
The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. | 2,009 | 2 |
It is my pleasure to meet virtually with you today.1 I look forward to our conversation, but first, please allow me to offer a few remarks on the economic outlook, the Federal Reserve's monetary policy, and our new monetary policy framework. | 1,999 | 2 |
A couple of participants indicated that they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation. | 2,011 | 2 |
Members agreed to continue to monitor inflation developments closely. | 1,998 | 2 |
In a paper presented at a recent conference at the Federal Reserve Bank of San Francisco, Kozicki and Tinsley (2003) develop an empirical model of the economy under the assumptions that the Fed's implicit inflation target is subject to permanent shocks and that the public learns about the Fed's target over time. | 2,020 | 2 |
Presumably even normal amortized equity that did not come from higher home prices was extracted in this manner. | 2,002 | 2 |
In their discussion of monetary policy for the period ahead, Committee members generally agreed that their overall assessments of the economic outlook were little changed since their previous meeting. | 2,021 | 2 |
Inflation, in fact, is under control, and starting to come down. | 2,018 | 2 |
Committee Policy Action Members viewed the information on U. S. economic activity received over the intermeeting period as suggesting that the economy had been expanding moderately and generally agreed that the economic outlook was broadly similar to that at the time of their March meeting. | 2,007 | 2 |
What I have elsewhere referred to as "currency competition" may be a driving force behind these changes in inflation outcomes and expectations and may be reflected in low nominal long-term interest rates and the flattening of yield curves.5 I’d like to briefly review what I mean by currency competition. | 2,022 | 0 |
However, energy prices were expected to level out, and rents, while difficult to forecast, were viewed by some participants as likely to decelerate in coming quarters. | 2,007 | 0 |
Indeed, most anticipated that inflation will slow for a time to rates somewhat lower than those they judge consistent with the dual goals of price stability and maximum employment, initially reflecting the recent declines in the prices of energy and other commodities and later responding to several years of substantial economic slack. | 2,022 | 0 |
If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. | 2,015 | 0 |
Consider a price increase for a breakfast cereal that increases the prices of both the brand-name cereal and the corresponding lower-priced store-brand cereal but maintains a differential between them. | 2,019 | 1 |
The disruptions to global economic activity had significantly affected financial conditions and impaired the flow of credit to U. S. households and businesses. | 2,011 | 0 |
Participants marked up their inflation projections, as they assessed that supply constraints in product and labor markets were larger and likely to be longer lasting than previously anticipated. | 2,011 | 1 |
If so, GDP growth this calendar year could be the fastest since 1983. | 2,006 | 1 |
As Chair Powell indicated in his Jackson Hole remarks, we think of our new framework as an evolution from "flexible inflation targeting" to a "flexible form of average inflation targeting. | 2,022 | 1 |
Measures of inflation compensation based on Treasury Inflation-Protected Securities (TIPS) edged up, on net, remaining close to their pre-pandemic levels. | 2,006 | 1 |
Of course, the basic problem in tackling the inflation of the 1970s is that we have one observation and many competing theories. | 2,002 | 1 |
Conversely, fiscal policy expansion in the surplus countries could be used to augment domestic demand, but any such adjustments would need to take account of medium-term goals for fiscal consolidation. | 2,020 | 0 |
Increased rates and a smaller balance sheet raise the cost of borrowing and thus reduce household and business demand. | 2,019 | 2 |
The recent strains in financial markets posed additional downside risks to economic growth. | 2,019 | 0 |
Nonetheless, considerable uncertainty surrounded expectations of rising inflation. | 2,014 | 2 |
The changes to the policy statement that we made over the past few FOMC meetings bring our policy guidance in line with the new framework outlined in the revised Statement on Longer-Run Goals and Monetary Policy Strategy that the Committee approved last August.4 In our new framework, we acknowledge that policy decisions going forward will be based on the FOMC's estimates of "shortfalls [emphasis added] of employment from its maximum level"—not "deviations." | 2,005 | 0 |
While great uncertainty regarding the path of fiscal policy and its economic effects will remain for some time, with the economy getting closer to full employment, the prospect of a material increase in fiscal stimulus over a sustained period could reasonably be expected to shift somewhat greater probability toward stronger inflation outcomes. | 2,019 | 1 |
Nonetheless, given a recovery in U. S. domestic demand approximating their current forecasts, growth in imports likely would exceed that of exports by a wide margin over the forecast horizon. | 2,014 | 1 |
Therefore, monetary policy in Japan might be affected not only by views about how such policies would affect macroeconomic performance, for given fiscal policies, but also by views about how fiscal policy might adjust to monetary policy. | 2,008 | 2 |
This outcome would be entirely consistent with the new framework the Federal Reserve unanimously adopted in August 2020 and began to implement at our September 2020 Federal Open Market Committee (FOMC) meeting.2 Recent FOMC Decisions and the New Monetary Policy Framework At FOMC meetings convened since the new framework was announced last August, the Committee made important changes to our policy statement that upgraded our forward guidance about the future path of the federal funds rate and asset purchases to bring it in line with our new framework. | 2,006 | 2 |
Foreign economic growth remained sluggish, restrained by weak activity in Europe and the associated spillovers--including through trade--to the rest of the world. | 2,016 | 2 |
After taking account of both frictional and structural unemployment, what unemployment rate is roughly equivalent to the maximum level of employment that can be sustained in the longer run? | 2,007 | 2 |
Over time, spot prices are inexorably drawn back to the long-term equilibrium price, as the balance between underlying supply and demand is restored. | 1,997 | 2 |
These interest rate changes also have effects on asset prices, and thereby on household wealth, as well as on the exchange value of the dollar and, thereby, on net exports and core import prices.7 However, relative to balance sheet policies, the influence of the short-term rate is far better understood and extensively tested: There have been several decades and many business cycles over which to measure and analyze how the federal funds rate affects financial markets and real activity. | 2,001 | 2 |
The economy continued to perform well into 2007, with solid growth through the third quarter and unemployment remaining near recent lows. | 2,005 | 1 |
In these circumstances, the Committee believed that some further measured policy firming was likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. | 2,010 | 1 |
In furtherance of these objectives, the Committee at its meeting in February established ranges for growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent respectively, measured from the fourth quarter of 1998 to the fourth quarter of 1999. | 2,017 | 2 |
Members also agreed that their evaluation of progress on their objectives would take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. | 1,998 | 2 |
At this point, for me, it comes down to what the incoming data and other economic information will tell us about the outlook for inflation. | 2,022 | 2 |
Although productivity growth had slowed from the extraordinarily rapid pace that prevailed earlier in the expansion, data for the fourth quarter of 2004, as well as preliminary indications for the first quarter of this year, suggested that gains from efficiency remained substantial. | 2,000 | 2 |
Measures of longer-term inflation expectations edged up in early January, but remained lower than they had been in all but the last few weeks of 2008. | 2,006 | 1 |
Members agreed that the Federal Reserve was committed to using its full range of tools to support the U. S. economy in this challenging time, thereby promoting its maximum-employment and price-stability goals. | 2,003 | 0 |
For example, households have been able with increasing ease to extract equity from their homes, and this doubtless has helped support consumer spending in recent years, complementing the traditional effects of monetary policy. | 2,004 | 2 |
Nonfarm payroll employment increased sharply further in January and February, and the civilian unemployment rate, at 4. | 2,010 | 1 |
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