| dc.description.abstract | The past year, we experienced the highest inflation rates in forty years. Recession fears have been on the rise in recent months even as inflation rates have started to turn a corner. In this issue of PERCspectives on Policy, Dennis Jansen and Andrew Rettenmaier discuss past and present inflation rates, the recent increases in the Federal Funds Rate, and the relationship between past instances of an inverted yield curve and recessions. The year-over-year annual inflation rate based on the Consumer Price Index (CPI) declined to 6.4% in December and based on the Personal Consumption Expenditures (PCE) price index, inflation rate as of November was 5.5%. By either measure, the inflation rate is still well above the Fed’s target of 2%. Yet, these mask an underlying pattern in the data, which shows higher monthly increases in the price level in the first half of that twelve month period, and lower monthly increases in the second half of the period. So, in recent months, inflation is much closer to the Fed's target. Still, slow growth in 2023 is anticipated by the Conference Board and the Federal Reserve Open Market Committee and the current inverted yield curve is also seen by the New York Federal Reserve Bank as signaling a possible recession on the horizon. | en |
