Some key features of the behavior of inflation in the United States appear to have changed in the past 20 years, with potentially important implications for forecasters and policymakers. A number of recent studies have provided strong evidence of a decline in the quarter-to-quarter or year-to-year variability of inflation. There is also evidence, albeit less conclusive, of a reduction in inflation persistence, which is a measure of how long it takes inflation to return to baseline after an unexpected change. Such shifts in the behavior or dynamics of inflation would necessitate changes in the economic relationships used by policymakers and economists to assess current conditions, forecast key economic indicators, and determine the implications of policy changes for future economic activity. Because inflation is ultimately a monetary phenomenon, the shift in dynamics might be due to a systematic change in the conduct of monetary policy since the late 1970s or early 1980s. Examinations o
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