Historical Context of Inflation Decline and Federal Reserve Policy
- Reports
- 2
- Developments
- 1
- Repetition
- 50%
New informationRepeats or wire copies
What happened
Ben Bernanke recounted research presented to the Federal Reserve in December 1996 by John Campbell and Robert Shiller, who argued that stocks were overvalued. This discussion took place while Alan Greenspan raised concerns about “irrational exuberance”. The reports also noted that annual-average U.S. consumer price inflation declined from 13.5% in 1980 to 3.2% in 1983.
From econotimes.com
Why it matters
Inflation trends influence the Federal Reserve's rate decisions, which are guided by economic indicators provided by the Bureau of Labor Statistics. The historical record shows that as inflation fell, the Federal Reserve pursued policies that led to rising unemployment.
Inflation data influences Fed rate decisions.
From econotimes.com
Who's involved
- Ben BernankeAmerican economist who recounted historical research presented to the Federal Reserve
- Alan GreenspanAmerican economist who raised questions about 'irrational exuberance' in 1996
- FEDThe US Central Bank that receives economic indicators and guides monetary policy
- Bureau of Labor StatisticsUS government agency that provides essential economic indicators to the Federal Reserve
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- Federal Open Market CommitteeSpeculative
The Federal Open Market Committee might gain more policy flexibility as inflation declines.
- NasdaqSpeculative
Nasdaq could see improved market sentiment as inflation declines.
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The entities involved
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FED
business
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Bureau of Labor Statistics
US government agency
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Ben Bernanke
American economist (born 1953)
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Related events
- Investor fears of rate hikes caused a market decline, driven by strong job gains and BLS data.
- The Federal Reserve is focusing on how inflation impacts consumer prices and is communicating its policy through financial news channels.
- David Russell commented on inflation trends to CNBC, suggesting high inflation data may force Fed action.
- Robin Brooks discusses how inflation data drives Fed policy decisions regarding rising interest rates and their impact on future profits.
- Energy costs are driving inflation, leading to FED hikes that are increasing borrowing costs in the private credit market.