Drivers of Inflation and Interest Rates
Asynchronous recessions among major world economies in the second half of the 1990s allowed the U.S. to enjoy low inflation and healthy growth, as the Fed was able to keep interest rates low in the context of imported disinflation. Currently, however, inflation is above the Fed’s 2% target, while economic growth is clearly slowing.
ECRI has just completed a new study on the direction of inflation and interest rates, including cyclical and structural perspectives. The results have important implications for those concerned about future shifts in the direction of inflation and interest rates.