James Bullard, Speech: Reflections on the Disinflationary Methods of Poincare and Thatcher

“Inflation is running near 1970s levels in the U.S. and the euro area.”

“How will the Fed and the ECB return inflation to the target level of 2%?”

“Current inflation in the U.S. and the euro area is near 1970s levels.”

“The Volcker disinflation was costly, but it was not credible initially—Volcker had to earn credibility.”

“Sargent initiated a literature on costless disinflation that emphasized inflation expectations as the key variable, not the Phillips curve.”

“Subsequent literature illustrated how credibility might be earned in models that depart from rational expectations.”

“The Fed and the ECB have considerable credibility, suggesting that a soft landing is feasible in the U.S. and the euro area if the post-pandemic regime shift is executed well.”