Philip N Jefferson: Discussion of the paper "Managing disinflations" by Stephen G Cecchetti, Michael E Feroli, Peter Hooper, Frederic S Mishkin, and Kermit L Schoenholtz

Discussion of the paper "Managing disinflations" by Stephen G Cecchetti, Michael E Feroli, Peter Hooper, Frederic S Mishkin, and Kermit L Schoenholtz by Mr Philip N Jefferson, Member of the Board of Governors of the Federal Reserve System, at the US Monetary Policy Forum, New York City, 24 February 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Accompanying charts of the speech

Thank you very much for inviting me to discuss this paper. It is a timely review for central bankers charged with lowering inflation to targets or, in the terminology of the authors, managing disinflation. I really enjoyed reading it. Before I begin, let me remind you that the views I will express today are my own and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System.

My discussion time is limited. Therefore, I'll be selective. I will begin by briefly describing what the paper is about. Then, I will summarize the authors' takeaways from their analysis. Next, I will share my takeaways. Finally, I will offer some concluding remarks.

So what is this paper about? Conceptually, the paper can be divided into three parts. In the first part, the authors review historical disinflationary episodes in the United States and other countries to see what lessons we might learn from past experience.

In the second part, the authors present a simple, tractable model that relates interest rates, inflation, inflation expectations, and slack in the labor market. They use the model to make predictions about future inflation.

In the third part, the authors provide advice to monetary policymakers on how to address the current situation; that is, how to manage disinflation.

With that, let me cut to consideration of the authors' takeaways.