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Continuity and Change in the Federal Reserve's Perspective on Price Stability

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Abstract

We examined statements made by Federal Reserve leadership since the early 1950s and established there has been considerable continuity in policymakers’ perceptions of the benefits of price stability. Policymakers have consistently contended that deviations from price stability give rise to greater cyclical instability, and they have also frequently suggested that potential output is significantly lowered by inflation. The recurrent support for price stability that comes through in these statements implies that it is invalid to interpret deviations from price stability in the U.S. economy as an indication that policymakers seek inflation.

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  • J. David López-Salido & Emily J. Markowitz & Edward Nelson, 2025. "Continuity and Change in the Federal Reserve's Perspective on Price Stability," Review, Federal Reserve Bank of St. Louis, vol. 107(11), pages 1-30, August.
    • Handle: RePEc:fip:fedlrv:101399
    DOI: 10.20955/r.2025.11
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    1. Orphanides, Athanasios, 2024. "The Federal Reserve's evolving interpretation and implementation of its mandate," IMFS Working Paper Series 213, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

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    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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