April 10 2006 post
on October 26, 2009 in CBs, Fed, Inflation No Comments
Worth a quick look at how I saw it in April 2006.
Turns out I was right about demand weaking from that date, but wrong about the Fed reaction function.
I thought they’d follow the mainstream view and respond to elevating inflation expectations.
Instead, Bernanke and Kohn subsequently looked past sharply elevating inflation expectations to the output gap when they first cut rates.