How to Extend the U.S. Expansion: A Suggestion: a presentation at the Real Return XII: The Inflation-Linked Products Conference 2018, New York, N.Y

James Bullard

No 319, Speech from Federal Reserve Bank of St. Louis

Abstract: In New York, St. Louis Fed President James Bullard laid out a possible strategy for extending the U.S. economic expansion. The strategy relies on placing more weight on financial market signals, such as the slope of the yield curve and market-based inflation expectations, than is customary. He noted that many current approaches to monetary policy strategy continue to overemphasize the now-defunct empirics of the Phillips curve, whose inflation-unemployment relationship has largely broken down over the past two decades. ?Handled properly, current financial market information can provide the basis for a better forward-looking monetary policy strategy,? he said. He also noted that these signals could help the FOMC better identify the neutral policy rate. ?The flattening yield curve and subdued market-based inflation expectations suggest that the current monetary policy stance is already neutral or possibly somewhat restrictive,? he said.

Pages: 30 pages
Date: 2018-09-05
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