The Fed's Inflation Challenge

The video discusses the divergence between inflation expectations and actual inflation, exploring theories on why this occurs. It examines the challenges central banks face in inflation targeting, especially in low inflation environments. The discussion includes alternative theories by economists like Janet Yellen's husband and the impact of low interest rates on market dynamics and inflation.

What is one reason why inflation expectations might remain stable despite changes in actual inflation?

• Inflation expectations are irrelevant.

• Inflation is not measured accurately.

• People are unaware of inflation changes.

• Central banks have become more persuasive.

What historical period is mentioned as having a strong correlation between actual inflation and inflation expectations?

• The 1980s

• The 2010s

• The 1990s

• The 2000s

Who has conducted theoretical research questioning the Fed's approach to inflation?

• Matthew Boesler

• Paul Volcker

• George Akerlof

• Janet Yellen

What is a potential consequence of focusing solely on CPI inflation according to the discussion?

• Overestimating inflation rates

• Ignoring market risks

• Underestimating economic growth

• Misjudging public trust

What is one factor mentioned that complicates efforts to stimulate inflation?

• Technological advancements

• Excessive market regulation

• High consumer confidence

• Demographic changes