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U.S. inflation developments in 1995

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  • Todd E. Clark

Abstract

In setting monetary policy in 1995, the Federal Reserve sought to promote sustainable economic growth and continued progress toward price stability. Toward those ends, the Federal Reserve adjusted the stance of monetary policy three times in 1995. In February, amid signs of increasing inflationary pressures, policy was tightened. In July and December, in response to signals of a slowing economy and abating inflationary pressures, policy was eased.> Clark reviews inflation developments in the United States during 1995. The first section examines the actual behavior of inflation over the past year. The second section examines developments in inflation expectations in 1995. The third section describes the contents and rationale of legislation introduced in Congress in 1995 that would make price stability the primary long-run goal of Federal Reserve monetary policy.> Clark concludes that inflation developments of the past year were largely favorable. Although some important inflation measures, notably the consumer price index, rose slightly relative to the previous year, inflation overall remained moderate. Moreover, expectations of inflation declined in 1995, so that future inflation is generally expected to remain near the current level. The Federal Reserve, therefore, appeared to be successful in maintaining moderate inflation during the year and in convincing the public that inflation will remain moderate in the period ahead.

Suggested Citation

  • Todd E. Clark, 1996. "U.S. inflation developments in 1995," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 27-42.
  • Handle: RePEc:fip:fedker:y:1996:i:qi:p:27-42:n:v.81no.1
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    References listed on IDEAS

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    1. Wynne, Mark A & Sigalla, Fiona D, 1996. " A Survey of Measurement Biases in Price Indexes," Journal of Economic Surveys, Wiley Blackwell, vol. 10(1), pages 55-89, March.
    2. Bankim Chadha & Eswar Prasad, 1993. "Interpreting the Cyclical Behavior of Prices," IMF Staff Papers, Palgrave Macmillan, vol. 40(2), pages 266-298, June.
    3. Cooley, Thomas F. & Ohanian, Lee E., 1991. "The cyclical behavior of prices," Journal of Monetary Economics, Elsevier, vol. 28(1), pages 25-60, August.
    4. Rotemberg, Julio J., 1996. "Prices, output, and hours: An empirical analysis based on a sticky price model," Journal of Monetary Economics, Elsevier, vol. 37(3), pages 505-533, June.
    5. Stanley Fischer & Franco Modigliani, 1978. "Towards an understanding of the real effects and costs of inflation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 114(4), pages 810-833, December.
    6. Mark A. Wynne & Fiona D. Sigalla, 1994. "The consumer price index," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 1-22.
    7. C. Alan Garner, 1994. "Capacity utilization and U.S. inflation," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 5-21.
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    Keywords

    Inflation (Finance) ; Monetary policy;

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