{
  "title": "Commodity Prices and Inflation Expectations in the United States",
  "publication": "IMF Working Papers, March 1, 2012",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/commodity-prices-and-inflation-expectations-in-the-united-states-25803",
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  "summary": "U.S. monetary policy can remain extraordinarily accommodative only if longer-term inflation expectations stay well-anchored, including in response to commodity price shocks.",
  "sections": [
    {
      "heading": "Authors and publication",
      "content": "- By Oya Celasun, Lev Ratnovski, Roxana Mihet\n- March 1, 2012\n- IMF Working Papers, Working Paper No. 2012/089\n- Volume: 2012; Issue: 089; Pages: 25\n- DOI: https://doi.org/10.5089/9781475502633.001\n- ISBN: 9781475502633\n- ISSN: 1018-5941\n- Stock No: WPIEA2012089"
    },
    {
      "heading": "Core findings",
      "content": "- U.S. monetary policy can remain extraordinarily accommodative only if longer-term inflation expectations stay well-anchored, including in response to commodity price shocks.\n- Oil price shocks have a statistically significant, but economically small impact on longer-term inflation compensation embedded in U.S. Treasury bonds.\n- The estimated effect of oil price shocks on longer-term inflation compensation is larger for the post-crisis period.\n- Oil price shocks are correlated with the variance of longer-term inflation expectations in the University of Michigan Survey of Consumers in the post-crisis period.\n- These results are not attributable to looser monetary policy; oil price increases were associated with expectations of a faster monetary tightening after the crisis.\n- Overall interpretation: findings are consistent with some impact of commodity prices on long-term inflation expectations and/or on inflation rate risk."
    },
    {
      "heading": "Robustness and controls",
      "content": "- The estimated effects are robust to controlling for measures of liquidity risk premia."
    },
    {
      "heading": "Policy relevance and implications",
      "content": "- Maintaining well-anchored longer-term inflation expectations is critical for allowing extraordinarily accommodative U.S. monetary policy in the face of commodity price shocks.\n- Evidence that oil price increases were associated with expectations of faster monetary tightening after the crisis suggests monetary policy tightening expectations, rather than looser policy, do not explain the observed correlations."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Commodity price shocks, Commodity prices, Food prices, Inflation, Oil prices, Prices\n- Keywords: A. commodity price, C. commodity price, commodity food price, commodity price, Commodity price shocks, commodity prices, food commodity price shock, food price inflation, food price rise, Food prices, Global, Inflation, inflation compensation, Inflation expectations, nominal exchange rate, oil price change, oil price inflation, Oil prices, price shock, risk premium, sustained commodity price rally, WP\n\nIMF Working Paper No. 2012/089\n\n---\n\n Content in this bundle\n\n- wp1289\n  - wp1289 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1289 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/commodity-prices-and-inflation-expectations-in-the-united-states-25803"
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    "Authors: Oya Celasun, Lev Ratnovski, Roxana Mihet",
    "Published: March 1, 2012",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475502633.001",
    "By Oya Celasun, Lev Ratnovski, Roxana Mihet",
    "March 1, 2012",
    "IMF Working Papers, Working Paper No. 2012/089",
    "Volume: 2012; Issue: 089; Pages: 25",
    "DOI: https://doi.org/10.5089/9781475502633.001",
    "ISBN: 9781475502633",
    "ISSN: 1018-5941",
    "Stock No: WPIEA2012089",
    "U.S. monetary policy can remain extraordinarily accommodative only if longer-term inflation expectations stay well-anchored, including in response to commodity price shocks.",
    "Oil price shocks have a statistically significant, but economically small impact on longer-term inflation compensation embedded in U.S. Treasury bonds.",
    "The estimated effect of oil price shocks on longer-term inflation compensation is larger for the post-crisis period.",
    "Oil price shocks are correlated with the variance of longer-term inflation expectations in the University of Michigan Survey of Consumers in the post-crisis period.",
    "These results are not attributable to looser monetary policy; oil price increases were associated with expectations of a faster monetary tightening after the crisis.",
    "Overall interpretation: findings are consistent with some impact of commodity prices on long-term inflation expectations and/or on inflation rate risk.",
    "The estimated effects are robust to controlling for measures of liquidity risk premia.",
    "Maintaining well-anchored longer-term inflation expectations is critical for allowing extraordinarily accommodative U.S. monetary policy in the face of commodity price shocks.",
    "Evidence that oil price increases were associated with expectations of faster monetary tightening after the crisis suggests monetary policy tightening expectations, rather than looser policy, do not explain the observed correlations.",
    "Subject: Commodity price shocks, Commodity prices, Food prices, Inflation, Oil prices, Prices",
    "Keywords: A. commodity price, C. commodity price, commodity food price, commodity price, Commodity price shocks, commodity prices, food commodity price shock, food price inflation, food price rise, Food prices, Global, Inflation, inflation compensation, Inflation expectations, nominal exchange rate, oil price change, oil price inflation, Oil prices, price shock, risk premium, sustained commodity price rally, WP",
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