Findings from Federal Reserve Bank of Kansas City in Economics and Statistics Reported (Did the Federal Reserve Break the Phillips Curve? Theory and Evidence of Anchoring Inflation Expectations): Economics – Economics and Statistics

2025 OCT 21 (NewsRx) -- By a News Reporter-Staff News Editor at CDC & FDA Daily -- Investigators publish new report on Economics - Economics and Statistics. According to news originating from Kansas City, Missouri, by NewsRx correspondents, research stated, “In a macroeconomic model with drifting long-run inflation expectations, the anchoring of inflation expectations manifests in two testable predictions. First, expectations about inflation far in the future should no longer respond to news about current inflation.”

Our news journalists obtained a quote from the research from the Federal Reserve Bank of Kansas City, “Second, better anchored inflation expectations weaken the relationship between unemployment and inflation, flattening the reduced-form Phillips curve. We evaluate both predictions and find that the Federal Reserve’s communication of a numerical inflation objective, first through its Summary of Economic Projections and later through the announcement of a 2% target in 2012, better anchored inflation expectations. Moreover, inflation expectations in the United States have remained anchored amid the volatility of the COVID-19 pandemic.”

According to the news editors, the research concluded: “In contrast, similar analysis reveals no evidence of anchoring in Japan despite the adoption of a numerical inflation target.”

This research has been peer-reviewed.

For more information on this research see: Did the Federal Reserve Break the Phillips Curve? Theory and Evidence of Anchoring Inflation Expectations. Review of Economics and Statistics, 2025;107(5):1310-1326. Review of Economics and Statistics can be contacted at: Mit Press, One Rogers St, Cambridge, MA 02142-1209, USA.

The news correspondents report that additional information may be obtained from Brent Bundick, Federal Reserve Bank of Kansas City, Kansas City, MO 64198, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1162/rest_a_01357. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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