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Cleveland Federal Reserve Bank’s updated estimate of 10-year expected inflation: only 1.53%

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The Cleveland Federal Reserve Bank reported today its “latest estimate of 10-year expected inflation is 1.53%. In other words, the public currently expects the inflation rate to be less than 2% on average over the next decade (see chart above).”

Methodology: “The Cleveland Fed’s estimate of inflation expectations is based on a model that combines information from a number of sources to address the shortcomings of other, commonly used measures, such as the “break-even” rate derived from Treasury inflation protected  securities (TIPS) or survey-based estimates.” For more details go here.

MP: This measure of 10-year expected inflation has been below 2% for almost two years, and has been around 1.5% for the last year. Despite three rounds of “quantitative easing” over the last five years, there’s still no sign at all of any pending inflationary pressures according to this measure of 10-year expectations.  And in fact, expected inflation has been falling, and is close to an all-time low for the 30-year history of the Cleveland Fed’s estimate.

 

4 thoughts on “Cleveland Federal Reserve Bank’s updated estimate of 10-year expected inflation: only 1.53%

  1. The Fed is suffocating the US economy with tight money. They worship at the altar of an outdated mission—that central banks, draped in glory, must fight inflation against all odds. Like all independent public agencies, the mission becomes outdates, but the agency never changes.

    The results: Long-term sovereign debt yields, major nations, have been declining for the last 30 years or so. Yes, good…but now we are in a danger zone.

    Everyone is hitting zero bound, or ZLB, where Japan has been since the early 1990s.

    This is a far greater threat to prosperity than mild or even moderate inflation. ZLB? Japan never got out.

    Porperty values down by 80 percent, same on the Nikkeu Dow. Real wages down, In yen, Japan’s GDP smaller than 1992. Mild deflation has killed Japan.

    Korea and China surging ahead. BTW, China’s central bank targets a ceiling of 4 percent inflation, but will go higher if growth is needed.

    China is booming. Monetary policy plays a role in that.

    Forget the Austrians. They say of expansive monetary policies: They may work in practice, but do they work in theory? For econometricians. They say, “Expansive monetary policies may work in practice, but do they work in my model?”

    The Fed needs to print a lot more money. The minor good news is that the Fed is sticking to the $85 billion a month in QE, and that seems to be helping. But they should double it.

    • “The Fed needs to print a lot more money. The minor good news is that the Fed is sticking to the $85 billion a month in QE, and that seems to be helping. But they should double it.”

      That “minor good news” seems likely to be winding down by this time in 2014.

  2. Like the creation of income in 1913, the Federal Reserve’s 100 year reign of tyranny has wrought more damage than benefit to the U.S. We need a modern day Andrew Jackson (Ron Paul, Jr.?) to work to abolish the Fed. Alan Greenspan himself has stated that you do not need a Central Bank if you are on the Gold Standard.

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