Pandemic Ebbs and Flows: Economic Data, Inflation Concerns, and Policymaking

Abstract: With a shock as large as the pandemic, policymakers need to be alert to potential changes to the economy. To date, inflation expectations and the underlying inflation rate look to be stable. It is important to keep in mind the difficulty that was experienced in achieving inflation of 2 percent in the United States and most of the developed world after the Great Financial Crisis. As a result, my perspective is that the emphasis on actual outcomes rather than forecasts of rising inflationary pressures when setting monetary policy appears justified. However, given the noise in the data, it will be important to carefully filter underlying inflation trends as labor markets tighten.

Keywords: economic outlook; COVID-19; inflation; monetary policy; fiscal policy; labor markets; inflationary trends;

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Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Speech

Publication Date: 2021-05-06

Note: Rosengren’s comments were delivered as part of the Vermont and New Hampshire Bankers Association Conference, and were based on a speech he delivered on May 5, 2021.