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Has Inflation Sustainably Reached Target?

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Abstract

A key measure of inflation finally reached the Fed?s 2% target in July after remaining persistently below that for years after the end of the last recession. Analysis shows that most of the increase in personal consumption expenditures price inflation towards the Fed?s target can be attributed to acyclical factors and are not due to a strengthening economy. While risks to the outlook for inflation appear broadly balanced, they include the considerable possibility that inflation has not yet sustainably reached target.

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  • Adam Hale Shapiro, 2018. "Has Inflation Sustainably Reached Target?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00177
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    1. Galí, Jordi & Gertler, Mark, 1999. "Inflation Dynamics: A Structural Economic Analysis," CEPR Discussion Papers 2246, C.E.P.R. Discussion Papers.
    2. Jeffrey Clemens & Joshua D. Gottlieb & Adam Hale Shapiro, 2016. "Medicare payment cuts continue to restrain inflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    3. Tim Mahedy & Adam Hale Shapiro, 2017. "What's Down with Inflation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    4. Gali, Jordi & Gertler, Mark, 1999. "Inflation dynamics: A structural econometric analysis," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 195-222, October.
    5. Jeffrey Clemens & Joshua D. Gottlieb & Adam Hale Shapiro, 2014. "How much do Medicare cuts reduce inflation?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    6. Adam Hale Shapiro, 2008. "Estimating the New Keynesian Phillips Curve: A Vertical Production Chain Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(4), pages 627-666, June.
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