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Journal Article
Research Spotlight: Tracking Inflation with Relative Price Changes
The Federal Reserve has operated under an inflation-targeting framework since the mid-1990s (at first implicitly and then explicitly) with successful results in maintaining price stability. Yet even when inflation is generally stable around its target rate, it still fluctuates from month to month. One source of those fluctuations is large shocks to supply and demand for particular goods or services. For example, a disruption in the oil market can cause a spike in gasoline prices and lift the overall inflation rate, even if prices in most other categories remain stable. Conversely, a shock ...