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Inflation Persistence as an Outcome of Monetary Policy

Author

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  • Taeyoung Doh
  • Stephen D. Vasiljevic

Abstract

Delayed or tepid monetary policy responses can prolong the inflationary effect of temporary economic shocks. When financial markets expect that policymakers are hesitant to raise interest rates in response to an inflationary shock, the shock may have a longer-lasting effect. Research shows that perceptions of a weak policy response can explain the persistent rise and slow decline in inflation during 2021–22, suggesting policymakers may need to consider inflation persistence as an outcome of monetary policy.

Suggested Citation

  • Taeyoung Doh & Stephen D. Vasiljevic, 2026. "Inflation Persistence as an Outcome of Monetary Policy," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-3, February.
    • Handle: RePEc:fip:fedkeb:102414
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