Retrospective on the Federal Reserve Board Staff's Inflation Forecast Errors since 2019

Ekaterina V. Peneva, Jeremy B. Rudd and Daniel Villar Vallenas
Additional contact information
Ekaterina V. Peneva: https://www.federalreserve.gov/econres/ekaterina-peneva.htm
Jeremy B. Rudd: https://www.federalreserve.gov/econres/jeremy-rudd.htm

No 2025-069, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper examines the Board staff's inflation forecast misses over the years following the COVID-19 outbreak, focusing on a timeline of what staff members knew when and lessons learned along the way. The staff significantly underestimated both the size and persistence of the inflationary surge that followed the reopening of the U.S. economy. As a result, staff members made various changes to their forecasting procedures, including using new types of data to inform their assessment of supply-demand imbalances in product and labor markets and to guide their judgmental forecast. Throughout, an important difficulty was the lack of similar historical episodes upon which to base a quantitative analysis. Over time, the innovations helped improve the staff's ability to understand and forecast inflation during this period. However, considerable uncertainty remains about the quantitative contributions of the various drivers of the pandemic-period inflation as well as the applicability of the lessons from this episode for forecasting.

Keywords: Inflation forecasting; Inflation dynamics; Phillips curve; covid-19 pandemic (search for similar items in EconPapers)
JEL-codes: E31 E37 (search for similar items in EconPapers)
Pages: 31 p.
Date: 2025-08-22
New Economics Papers: this item is included in nep-cba and nep-mon
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.federalreserve.gov/econres/feds/files/2025069pap.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2025-69

DOI: 10.17016/FEDS.2025.069

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().