Deflation Dangers

Sharp falls in inflation expectations are challenging market assumptions about future rate hikes…
Deflation threat to Draghi’s credibility, Financial Times 16 Oct 2014
China inflation slips to near five-year low, Reuters, 15 Oct 2014
Rate expectations change faster than the data, Financial Times, 15 Oct 2014
On the oft-cited 5-year/5-year breakeven inflation rate (as a measure of inflation expectations) good places to start are…
Inflation Expectations: How the Market Speaks, FRBSF Economic Letter, 3 Oct 2005
FRED codes are T5YIFR (daily) and T5IFRM (monthly)

Assessing the risk to inflation from inflation expectations, BoE Quarterly Bulletin, 2014 Q2
Inflation Expectations in the Euro area: A review of recent developments, ECB Monthly Bulletin, Feb 2011 (the ECB regularly reports updates in its regular publications)

The IMF’s World Economic Reports often include estimated probabilities of deflation by global region. The October 2014 update can be found here.

A short primer on deflation was published by the St Louis FRB in February 2011: “Deflation: Who Let the Air Out?


Can low interest rates cause deflation? Some thoughts on the policy implications of the Fisher equation…
Monetary Policy with Interest On Reserves, The Grumpy Economist, 16 Oct 2014
Monetary Theory on the Neo-Fisherite Edge, Uneasy Money, 6 May 2014
The Cure for Neo-Fisherism: History, MacroMarketMusings, 28 Apr 2014
On the elimination of privately issued money, Financial Times, 25 Apr 2014
The Neo-Fisherite Rebellion, Noahpinion, 23 Apr 2014

Fed Plumbing

An insight into the daily life of bankers’ balances (reserves), the payments system and clearing; stuff that is typically skated over in the textbooks. Particularly useful is the discussion of how QE and the subsequent deluge of liquidity has impacted Fedwire activity….
Turnover in Fedwire Funds Has Dropped Considerably since the Crisis, but It’s Okay, Liberty Street Economics, FRB New York, 25 Aug 2014
Liquidity and IOR, The Grumpy Economist, 28 Aug 2014

Fed Watching For Geeks

QE tapering remains on the agenda with the gap between term premia and expected short rates playing a vital role…
The separation principle drives the Fed towards tapering, Gavyn Davies, FT blog, 24 Nov 2013
Communication and Monetary Policy, Fed Chairman Bernanke, 19 Nov 2013
Should the Yellen Fed rely on optimal control models? Gavyn Davies, FT blog, 10 Nov 2013
What Fed economists are telling the FOMC, Gavyn Davies, FT blog, 7 Nov 2013