Is the Bet on Inflation Finally Paying Off?

The video discusses inflation trends from 2015 to 2017, highlighting the impact of base effects on inflation metrics. It explains the difference between good and bad inflation, focusing on services like shelter and healthcare as major drivers. The video also covers strategies for dealing with inflation, particularly through TIPS, and examines the Fed's approach to managing inflation expectations.

What was the impact of the decline in energy prices at the end of 2015 on inflation metrics?

• It caused a permanent decrease in inflation.

• It led to a temporary increase in inflation.

• It resulted in base effects that affected year-over-year metrics.

• It had no impact on inflation metrics.

Which component is a major driver of inflation in developed markets like the US?

• Agriculture

• Technology

• Services

• Manufacturing

What percentage of the core calculation does shelter contribute to in the CPI?

• 40%

• 32%

• 50%

• 20%

What is the Fed's target inflation measure?

• CPI

• GDP Deflator

• PPI

• PCE

Why does the Fed want to allow the economy to run a little hot?

• To reduce interest rates

• To increase GDP growth

• To align inflation expectations with their targets

• To decrease unemployment rates