Exact(3)
The first has to do with influencing expectations, which play a crucial role in determining inflation.
They assign less importance to the gap between aggregate demand and supply in determining inflation, and more importance to the stance of monetary policy.
The Fed, in determining inflation dangers, is said to keep close track of a figure in the Commerce report that measures prices of goods excluding energy and food products, which are considered volatile from month to month.
Similar(57)
He said wages, which largely determine inflation, would rise only moderately in 2010 and 2011 because high unemployment and resulting fears of losing jobs will enforce wage constraint.
The Fed funds rate ripples throughout our financial system and, in ways that are still not fully understood, helps determine inflation, unemployment, and, from time to time, the very structural soundness of the global economy.
Maybe the cost of food, clothing and appliances have remained steady, but the overall cost of living has risen far greater than the 2percentt or so that the government says is the adjustment factor used to determine inflation and Social Security payments.
Under chained CPI, instead of measuring the growing cost of the same set of goods to determine inflation, economists assume that when one product gets too expensive, consumers switch to a something less expensive one -- substituting cheaper hamburger for pricier steak, for instance.
Officials also have expressed increased concern about inflation expectations, which play a significant role in determining future inflation.
Both books presented an adaptive-expectations Phillips curve, in which inflation depended both on the unemployment rate and on lagged inflation, which was supposed to determine expectations: Inflation rate = -α u – NAIRU) + Lagged inflation rate where u was the unemployment rate and the NAIRU was the non-accelerating-inflation rate of unemployment.
It is monetary policy that determines general inflation or deflation, not structural factors such as global competition.
After nearly six months in which the bank's communication has focused on soothing jittery financial markets, Mr. Trichet broadened his remarks to include pointed references to companies and employees whose individual decisions across Europe will determine whether inflation rises.
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