Inflation, inflation expectations, and monetary policy

Careful readers of FOMC communications will note that in addition to talking about actual inflation, the committee often talks about inflation expectations. Sandra Pianalto, the president and chief executive officer of the Federal Reserve Bank of Cleveland, explains the important role that inflation expectations play in the monetary policy process. This Commentary is taken from a speech she delivered to the Copper Development Association’s Global Market Trends Conference on September 8, 2006.