Getting to 2%: Lessons from Disinflation Experiences

The Federal Reserve has seen much success in its fight against inflation. The headline rate over the 12 months ending in August 2023 was 3.7%; much lower than the peak of 9.1% in June 2022. Notably, inflation has come down with virtually no rise in unemployment. But it remains higher than the Fed's 2% target. Will reducing inflation by another 1.7 percentage points prove as costless to output and employment? What lessons can the Fed draw from moderate disinflationary episodes in other countries? Peter Blair-Henry joins EconoFact Chats to discuss his findings on these issues, drawing on a recent Foreign Affairs article co-authored with Anusha Chari (University of North Carolina). Peter is a Senior Fellow at Stanford's Hoover Institution, and Dean Emeritus of New York University's Stern School of Business.