Englander: Fed Would Rather Miss to the Upside

The transcript discusses the Federal Reserve's approach to inflation, suggesting a shift in their target above 2% due to asymmetric loss functions. It examines economic indicators like GDP and labor market data, questioning the relevance of the Phillips curve. The discussion highlights productivity issues and the challenges in determining the Fed's neutral rate, suggesting a need for confidence intervals in their estimates.

What is the Federal Reserve's current stance on inflation targets?

• They want it below 2% to avoid overheating.

• They aim to keep it strictly at 2%.

• They are comfortable with it slightly above 2%.

• They have no specific target.

Which economic concept is questioned in its effectiveness in the second section?

• The Laffer Curve

• The Phillips Curve

• The Taylor Rule

• The Kuznets Curve

What has been the trend in labor costs according to the second section?

• They have been decreasing.

• They have remained stable.

• They have been growing faster than 2%.

• They have been fluctuating unpredictably.

What challenge does the Fed face regarding the neutral Fed funds rate?

• Ignoring it in decision-making

• Implementing it in policy

• Communicating it to the public

• Determining its exact value

Why is it suggested that the Fed should provide a confidence interval around their neutral rate estimates?

• To simplify their reports

• To comply with international standards

• To increase transparency

• To show the range of possible errors