Study Results from Federal Reserve Board Broaden Understanding of Investment (Inflation Risk and the Labor Market: Beneath the Surface of a Flat Phillips Curve): Investment

2026 AUG 17 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Current study results on Investment have been published. According to news reporting out of Washington, District of Columbia, by NewsRx editors, the research stated, “While the Phillips curve appeared quiescent after the Great Financial Crisis (GFC), inflation risk, as gauged from option prices, remained sensitive to employment dynamics. Using Phillips-curve regressions centered on option-implied risk-neutral moments, I show that, in tight labor markets, a fall in the unemployment gap raises the risk that inflation overshoots expectations-even if realized inflation remains stable.”

Our news journalists obtained a quote from the research from Federal Reserve Board, “In tight labor markets, implied moments convey valuable information, as shown by their ability to anticipate future patterns in inflation break-evens and wage growth. Being risk neutral, option-implied moments embed risk premia, which can make moments particularly informative about developments that matter the most to investors.”

According to the news editors, the research concluded: “The usefulness of inflation options in assessing risk, despite their illiquidity, is rooted in reputational incentives that dealers have to disseminate accurate quotes.”

This research has been peer-reviewed.

For more information on this research see: Inflation Risk and the Labor Market: Beneath the Surface of a Flat Phillips Curve. International Journal of Central Banking, 2026;22(3):119-163. International Journal of Central Banking can be contacted at: Assoc International Journal Central Banking, Postfach 16 03 19, Frankfurt, 60066, Germany.

Our news journalists report that additional information may be obtained by contacting Sirio Aramonte, Federal Reserve Board, Washington, DC 20551, United States.

(Our reports deliver fact-based news of research and discoveries from around the world.)