Is the Phillips curve dead in the Fed’s new monetary policy framework?: The MUFG Global Markets Podcast

Over the past four weeks, the FOMC continues to deliver what appears to be a forceful, seminal shift in their monetary policy framework. The Committee has strengthened its maximum employment mandate, elevating its stature to be a vibrant, durable, broad-based, and inclusive one. 12 years of erroneous predictions has inclined the pragmatic Chair Powell to dispose of many of the features of the Phillips curve thinking within the Fed’s inflation models and to relegate it’s importance upon the indicator dashboard. This shifting of emphasis within the new framework likely may lead the U3 unemployment rate to decline all the way to 2.604% by year-end 2024 (a 100-year low!) – according to our models forecasts. Still, there remain many unanswered questions, but a deeper understanding of the new framework is a must for any investor.

In this episode, MUFG U.S. Rates Strategist, John Herrmann, continues to try to enhance listeners’ understanding of the Fed's new framework.