3/3 A thoughtful conversation on India’s political economy and long-term macro challenges.

🎥 Watch the full conversation:
youtu.be/oC-FmkJlXWg

OR

Listen to the podcast now:
open.spotify.com/episode/7FtN...

#InflationTargeting #FiscalMonetaryPolicy #Federalism

BasisPointInsight.com - Inflation Targeting Needs Flexibility, Not Unanimity by Ashima Goyal When monetary consensus turns to groupthink, inflation targeting risks losing its flexibility—and its purpose. by Ashima Goyal, BasisPointInsight.com

1/3 India’s latest debate on inflation targeting misses a crucial point: the framework has worked, but only when it stays flexible. Yes, inflation is lower on average since adoption—but periods of unnecessarily high real interest rates have also hurt growth.

#InflationTargeting #MonetaryPolicy #RBI

Further evidence on inflation targeting and income distribution This paper examines the effect of inflation targeting (IT) on income distribution in a panel of 70 countries. Employing panel regressions and a variety of propensity score matching methods, we find s....

"Further evidence on inflation targeting and income distribution," by @jtcoys.bsky.social of @uniofeastanglia.bsky.social and Chrysovalantis Vasilakis of @bangoruniversity.bsky.social.
#IncomeDistribution #InflationTargeting #MonetaryPolicy
⬇️OPEN ACCESS⬇️

Fed Powell: Framework calls for a balanced approach * Fed unanimously adopts new policy framework of flexible inflation targeting, eliminates 'makeup' strategy for inflation * In Jackson Hole speech, says framework calls for balanced approach when central bank's goals in tension * Prior framework’s emphasis on overly specific set of economic conditions may have led to some confusion * Framework removes language indicating zero-lower-bound is a defining feature of economy * New framework designed to work in a range of economic conditions * Idea of intentionally moderate inflation overshoot proved irrelevant * New framework emphasizes commitment to act forcefully to ensure longer-term inflation expectations remain well-anchored * Fed still believes it may not need to tighten policy solely based on uncertain estimates that employment may be beyond its maximum sustainable level * Shortfall language in previous statement posed communications challenge, and is removed in new framework * Preemptive action likely would be warranted should tight labor market pose risk to price stability * Fed’s goals are in tension, must balance both sides of Fed’s mandate * Stability of unemployment rate allows Fed to 'proceed carefully' as we consider changes to policy stance * Risks to inflation tilted to upside, risks to employment to the downside * In Jackson Hole speech says shifting balance of risks may warrant adjusting policy stance * Downside risks to labor market rising * GDP growth has slowed notably, reflecting slowdown in consumer spending * Latest data indicates 12-month PCE inflation rose 2.6% in July; core rose 2.9% * Effects of tariffs on consumer prices now clearly visible, expect effects to accumulate in coming months * Reasonable base case is inflation effects of tariffs will be short-lived * Possible that tariff-driven upward pressure on prices could spur lasting inflation dynamic, but unlikely, given downside risks to labor market * Cannot allow one-time increase in price level to be ongoing inflation problem * Tighter immigration has led to abrupt slowdown in labor force growth This article was written by Greg Michalowski at investinglive.com.

| etsy.me/3RHihSQ | ctrendfx.com #FederalReserve #InflationTargeting #MonetaryPolicy #EconomicFramework #CentralBank

Milton Friedman and nominal income targeting For much of his career, Milton Friedman advocated a constant monetary growth rule to limit central bank discretion and to achieve long-term price stability. By contrast, Friedman wrote little on nomi....

Patrick Horan of the Fiscal Lab on Capitol Hill examines Milton Friedman's work and his views on nominal income targeting.
#MiltonFriedman #MonetaryPolicy #NominalIncome #InflationTargeting

Good Deflation, Bad Deflation and the 2% Target Trap For decades, deflation has been framed as a threat to growth and stability—something policymakers must avoid at all costs. The narrative goes like this: falling prices make consumers delay spending, w...

Hayek warned about credit booms. Bernanke warned about deflation.

Only one of them saw it coming (it wasn't Bernanke).

Why are we so afraid of falling prices?

Time to question the 2% target.

#Macro #Deflation #CentralBanks #QE #InflationTargeting

www.linkedin.com/pulse/good-d...

US Federal Reserve & Monetary Policy The US Federal Reserve plays a crucial role in shaping the country's economic landscape through its implementation of monetary policy. With keywords such as Fe

The US Federal Reserve plays a crucial role in shaping the country's economic landscape through its implementation of monetary policy. #BankingLiquidity #BondYields #FedRateHikes #InflationTargeting #QuantitativeTightening
www.stockexchange.eu/us-federal-r...

Interesting chart from RBNZ 👇Market has priced in a ~150bp cut for NZ over next 12 months; compared to ~125bp for US over same period (both are at roughly ~4.75% right now). RBNZ is interesting as the first central bank to introduce #InflationTargeting back in 1990! 🙏