Accessible Version

Accessible Version

Is This Time Different? Recent Monetary Policy Cycles in Retrospect

Philip N. Jefferson
Vice Chair, Federal Reserve Board
Peterson Institute, February 22, 2024

Disclaimer: 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.

Roadmap of Talk

  • Outlook on the U.S. economy and risks
  • Review of past monetary policy cycles
  • Lessons for current monetary policy
Figure 1: Job Opening Counts Index

Weekly
2019=100

Date Openings
1/5/2019 104.4447042
1/12/2019 104.542238
1/19/2019 104.6397717
1/26/2019 104.7373055
2/2/2019 103.1872156
2/9/2019 101.6371258
2/16/2019 100.087036
2/23/2019 98.53694615
3/2/2019 99.27541591
3/9/2019 100.0138857
3/16/2019 100.7523554
3/23/2019 101.4908252
3/30/2019 102.229295
4/6/2019 101.7207262
4/13/2019 101.2121574
4/20/2019 100.7035886
4/27/2019 100.1950198
5/4/2019 100.6130215
5/11/2019 101.0310233
5/18/2019 101.449025
5/25/2019 101.8670268
6/1/2019 101.3877181
6/8/2019 100.9084094
6/15/2019 100.4291007
6/22/2019 99.94979207
6/29/2019 99.4704834
7/6/2019 99.16394878
7/13/2019 98.85741416
7/20/2019 98.55087955
7/27/2019 98.24434493
8/3/2019 98.58153301
8/10/2019 98.91872109
8/17/2019 99.25590917
8/24/2019 99.59309725
8/31/2019 99.93028532
9/7/2019 99.88848515
9/14/2019 99.84668497
9/21/2019 99.8048848
9/28/2019 99.76308462
10/5/2019 100.337837
10/12/2019 100.9125894
10/19/2019 101.4873418
10/26/2019 102.0620943
11/2/2019 100.9307028
11/9/2019 99.79931144
11/16/2019 98.66792004
11/23/2019 97.53652863
11/30/2019 96.40513722
12/7/2019 95.67363416
12/14/2019 94.94213109
12/21/2019 94.21062803
12/28/2019 93.47912496
1/4/2020 95.13371523
1/11/2020 96.78830549
1/18/2020 98.44289576
1/25/2020 100.097486
2/1/2020 99.57080382
2/8/2020 99.04412161
2/15/2020 98.51743941
2/22/2020 97.9907572
2/29/2020 97.46407499
3/7/2020 93.28057413
3/14/2020 89.09707327
3/21/2020 84.91357241
3/28/2020 80.73007155
4/4/2020 76.87052205
4/11/2020 73.01097255
4/18/2020 69.15142304
4/25/2020 65.29187354
5/2/2020 67.78595066
5/9/2020 70.28002777
5/16/2020 72.77410489
5/23/2020 75.268182
5/30/2020 77.76225912
6/6/2020 79.6363003
6/13/2020 81.51034149
6/20/2020 83.38438267
6/27/2020 85.25842386
7/4/2020 86.63434629
7/11/2020 88.01026872
7/18/2020 89.38619115
7/25/2020 90.76211358
8/1/2020 90.33296512
8/8/2020 89.90381665
8/15/2020 89.47466819
8/22/2020 89.04551972
8/29/2020 88.61637126
9/5/2020 89.14584014
9/12/2020 89.67530903
9/19/2020 90.20477791
9/26/2020 90.7342468
10/3/2020 91.59254373
10/10/2020 92.45084066
10/17/2020 93.30913759
10/24/2020 94.16743451
10/31/2020 95.02573144
11/7/2020 95.21731558
11/14/2020 95.40889972
11/21/2020 95.60048385
11/28/2020 95.79206799
12/5/2020 95.71891768
12/12/2020 95.64576737
12/19/2020 95.57261707
12/26/2020 95.49946676
1/2/2021 96.39399051
1/9/2021 97.28851426
1/16/2021 98.183038
1/23/2021 99.07756175
1/30/2021 99.9720855
2/6/2021 102.009844
2/13/2021 104.0476026
2/20/2021 106.0853611
2/27/2021 108.1231196
3/6/2021 110.348979
3/13/2021 112.5748383
3/20/2021 114.8006976
3/27/2021 117.0265569
4/3/2021 120.1232533
4/10/2021 123.2199496
4/17/2021 126.3166459
4/24/2021 129.4133422
5/1/2021 130.9515886
5/8/2021 132.4898351
5/15/2021 134.0280815
5/22/2021 135.566328
5/29/2021 137.1045744
6/5/2021 137.9022611
6/12/2021 138.6999477
6/19/2021 139.4976344
6/26/2021 140.2953211
7/3/2021 142.5608906
7/10/2021 144.8264601
7/17/2021 147.0920296
7/24/2021 149.3575991
7/31/2021 151.6231686
8/7/2021 151.8948697
8/14/2021 152.1665708
8/21/2021 152.438272
8/28/2021 152.7099731
9/4/2021 152.438272
9/11/2021 152.1665708
9/18/2021 151.8948697
9/25/2021 151.6231686
10/2/2021 152.9774942
10/9/2021 154.3318199
10/16/2021 155.6861456
10/23/2021 157.0404713
10/30/2021 158.3947969
11/6/2021 157.9210616
11/13/2021 157.4473263
11/20/2021 156.973591
11/27/2021 156.4998557
12/4/2021 158.5689643
12/11/2021 160.638073
12/18/2021 162.7071817
12/25/2021 164.7762903
1/1/2022 163.8316064
1/8/2022 162.8869224
1/15/2022 161.9422385
1/22/2022 160.9975545
1/29/2022 160.0528705
2/5/2022 160.4499722
2/12/2022 160.8470739
2/19/2022 161.2441755
2/26/2022 161.6412772
3/5/2022 163.1251834
3/12/2022 164.6090896
3/19/2022 166.0929958
3/26/2022 167.5769021
4/2/2022 166.8189256
4/9/2022 166.060949
4/16/2022 165.3029725
4/23/2022 164.544996
4/30/2022 163.7870195
5/7/2022 162.700215
5/14/2022 161.6134104
5/21/2022 160.5266059
5/28/2022 159.4398013
6/4/2022 157.7608276
6/11/2022 156.0818539
6/18/2022 154.4028802
6/25/2022 152.7239065
7/2/2022 153.8915247
7/9/2022 155.059143
7/16/2022 156.2267612
7/23/2022 157.3943794
7/30/2022 158.5619976
8/6/2022 154.4446804
8/13/2022 150.3273631
8/20/2022 146.2100459
8/27/2022 142.0927286
9/3/2022 144.3778049
9/10/2022 146.6628811
9/17/2022 148.9479574
9/24/2022 151.2330336
10/1/2022 150.1657358
10/8/2022 149.098438
10/15/2022 148.0311402
10/22/2022 146.9638424
10/29/2022 145.8965446
11/5/2022 146.8544652
11/12/2022 147.8123859
11/19/2022 148.7703066
11/26/2022 149.7282273
12/3/2022 151.0881263
12/10/2022 152.4480253
12/17/2022 153.8079244
12/24/2022 155.1678234
12/31/2022 156.5277224
1/7/2023 154.190396
1/14/2023 151.8530695
1/21/2023 149.5157431
1/28/2023 147.1784166
2/4/2023 145.1267247
2/11/2023 143.0750327
2/18/2023 141.0233408
2/25/2023 138.9716489
3/4/2023 138.1739622
3/11/2023 137.3762755
3/18/2023 136.5785889
3/25/2023 135.7809022
4/1/2023 137.3832422
4/8/2023 138.9855823
4/15/2023 140.5879223
4/22/2023 142.1902624
4/29/2023 143.7926024
5/6/2023 141.3403255
5/13/2023 138.8880485
5/20/2023 136.4357716
5/27/2023 133.9834947
6/3/2023 132.4125047
6/10/2023 130.8415148
6/17/2023 129.2705249
6/24/2023 127.699535
7/1/2023 127.0167988
7/8/2023 126.3340626
7/15/2023 125.6513264
7/22/2023 124.9685902
7/29/2023 124.285854
8/5/2023 126.2957458
8/12/2023 128.3056375
8/19/2023 130.3155293
8/26/2023 132.325421
9/2/2023 131.9157793
9/9/2023 131.5061376
9/16/2023 131.0964959
9/23/2023 130.6868542
9/30/2023 130.2772125
10/7/2023 128.5425052
10/14/2023 126.8077979
10/21/2023 125.0730907
10/28/2023 123.3383834
11/4/2023 123.5926678
11/11/2023 123.8469522
11/18/2023 124.1012366
11/25/2023 124.355521
12/2/2023 124.6369755
12/9/2023 124.91843
12/16/2023 125.1998845
12/23/2023 125.481339
12/30/2023 125.7627935

Note: JOLTS job opening counts at the end of each week divided by the average job opening counts in the year 2019. The gray shaded bar indicates a period of business recession as defined by the National Bureau of Economic Research. The shaded recession period extends from February 2020 through April 2020.

Source: Bureau of Labor Statistics, Job Opening and Labor Turnover Survey (JOLTS)

Figure 2: PCE and Core PCE Inflation

Monthly
Percent

Date PCE Core PCE
1/1/2014 1.405405405 1.452461501
2/1/2014 1.093982053 1.390117798
3/1/2014 1.389703418 1.447423076
4/1/2014 1.673113816 1.571265848
5/1/2014 1.766166288 1.623656257
6/1/2014 1.651458614 1.563544884
7/1/2014 1.66924169 1.610321322
8/1/2014 1.506243876 1.5397486
9/1/2014 1.497249312 1.554848059
10/1/2014 1.332944861 1.470914332
11/1/2014 1.085759408 1.392578537
12/1/2014 0.732258801 1.35634629
1/1/2015 0.041401867 1.209711352
2/1/2015 0.170701428 1.277481626
3/1/2015 0.199349274 1.280839895
4/1/2015 0.110324064 1.294372884
5/1/2015 0.185286216 1.247201122
6/1/2015 0.270428676 1.254154386
7/1/2015 0.21973283 1.178950004
8/1/2015 0.239271301 1.221254628
9/1/2015 0.06569965 1.232124816
10/1/2015 0.095498234 1.177988678
11/1/2015 0.253877543 1.196702051
12/1/2015 0.345963756 1.191700693
1/1/2016 0.871148633 1.406240256
2/1/2016 0.640330493 1.465885968
3/1/2016 0.685510473 1.457447911
4/1/2016 0.925906853 1.51994868
5/1/2016 0.84868536 1.568732819
6/1/2016 0.829607449 1.552403955
7/1/2016 0.755084268 1.599331807
8/1/2016 0.888210466 1.696958457
9/1/2016 1.219774921 1.685254537
10/1/2016 1.427003293 1.78240836
11/1/2016 1.397404089 1.718859162
12/1/2016 1.657158102 1.770093228
1/1/2017 2.00521047 1.863334939
2/1/2017 2.197136846 1.867275108
3/1/2017 1.906361021 1.678654624
4/1/2017 1.767473187 1.636821346
5/1/2017 1.55777205 1.545521143
6/1/2017 1.465547928 1.576443803
7/1/2017 1.485631775 1.503110759
8/1/2017 1.571908732 1.43359371
9/1/2017 1.757444307 1.422587369
10/1/2017 1.682040701 1.541011105
11/1/2017 1.793712905 1.545376496
12/1/2017 1.766409948 1.576876513
1/1/2018 1.757649496 1.632037028
2/1/2018 1.837607696 1.644218118
3/1/2018 1.998292058 1.909183171
4/1/2018 2.046628228 1.884219287
5/1/2018 2.266206537 1.980902378
6/1/2018 2.26830784 1.936219818
7/1/2018 2.338607056 1.99580042
8/1/2018 2.180411289 1.895763
9/1/2018 2.009960159 1.960295291
10/1/2018 2.053098049 1.87090739
11/1/2018 1.941892227 2.010245188
12/1/2018 1.864690888 2.038079914
1/1/2019 1.497050366 1.852346867
2/1/2019 1.425810523 1.740152967
3/1/2019 1.509002797 1.607193918
4/1/2019 1.577147574 1.645636897
5/1/2019 1.456724968 1.57300059
6/1/2019 1.411363436 1.682503534
7/1/2019 1.440222446 1.666568633
8/1/2019 1.421610833 1.759527917
9/1/2019 1.304458201 1.647668901
10/1/2019 1.331448901 1.643123693
11/1/2019 1.33196921 1.472366317
12/1/2019 1.539420259 1.5028958
1/1/2020 1.697918492 1.552324112
2/1/2020 1.642005794 1.65599899
3/1/2020 1.146949231 1.49152345
4/1/2020 0.411140455 0.932470903
5/1/2020 0.448629938 0.950851704
6/1/2020 0.705525326 0.908423918
7/1/2020 0.900509613 1.163867086
8/1/2020 1.165337012 1.365943879
9/1/2020 1.247180832 1.444811289
10/1/2020 1.118688739 1.366676918
11/1/2020 1.153879439 1.427939961
12/1/2020 1.366487026 1.553524679
1/1/2021 1.615003159 1.715242881
2/1/2021 1.88520435 1.753229382
3/1/2021 2.713022122 2.255560018
4/1/2021 3.724613665 3.220545488
5/1/2021 4.155356627 3.64397685
6/1/2021 4.372402806 3.949218862
7/1/2021 4.533149673 4.009989229
8/1/2021 4.644842613 4.018854118
9/1/2021 4.805422283 4.07439036
10/1/2021 5.406947985 4.500805916
11/1/2021 5.985912146 4.951114143
12/1/2021 6.180290804 5.238009802
1/1/2022 6.297046493 5.369493822
2/1/2022 6.547004375 5.574700232
3/1/2022 6.892944539 5.549581561
4/1/2022 6.61979157 5.254939867
5/1/2022 6.689955363 5.074560633
6/1/2022 7.116914165 5.192582026
7/1/2022 6.616947291 4.961510264
8/1/2022 6.515400036 5.20747684
9/1/2022 6.556096498 5.47208344
10/1/2022 6.347917118 5.325857173
11/1/2022 5.928570147 5.090360902
12/1/2022 5.441910192 4.865136479
1/1/2023 5.479087823 4.901181535
2/1/2023 5.189610207 4.844533779
3/1/2023 4.442269717 4.782955351
4/1/2023 4.446419082 4.762998022
5/1/2023 3.962025536 4.687829943
6/1/2023 3.198420533 4.280077342
7/1/2023 3.314708482 4.189149074
8/1/2023 3.347591753 3.726184894
9/1/2023 3.369589307 3.592483101
9/30/2023 3.369589307 3.592483101
10/31/2023 2.941640492 3.388554962
11/30/2023 2.645124576 3.162991101
12/31/2023 2.618028206 2.95593627
1/31/2024 2.356419858 2.814393166

Note: Percent change in the personal consumption expenditures (PCE) price index from 12 months ago. Core refers to the price index excluding food and energy. The figure plots data from the Bureau of Economic Analysis; data for January 2024 are Federal Reserve Board staff estimates based on available CPI and PPI data. The gray shaded bar indicates a period of business recession as defined by the National Bureau of Economic Research. The shaded period extends from February 2020 through April 2020.",

Source: Bureau of Economic Analysis, Board of Governors of the Federal Reserve System, PCE Price Index

Figure 3: Select Components of Core PCE Inflation

Monthly
Percent

Date Housing services Goods ex. food and energy Services ex. housing and energy
1/31/2014 2.577490754 -1.050073766 2.205416967
2/28/2014 2.583557104 -1.045649403 2.091389358
3/31/2014 2.669039146 -0.946317297 2.120928817
4/30/2014 2.712701774 -0.830984688 2.272727273
5/31/2014 2.732085246 -0.749517613 2.323765737
6/30/2014 2.746947521 -0.684499859 2.185272131
7/31/2014 2.852744068 -0.642952734 2.214663643
8/31/2014 2.796563287 -0.766923279 2.163881402
9/30/2014 2.84777317 -0.640060607 2.121476315
10/31/2014 2.867681789 -0.583971394 1.943352874
11/30/2014 2.889933473 -0.83592535 1.91213806
12/31/2014 2.799033427 -0.834615609 1.87551459
1/31/2015 2.848722986 -1.031008205 1.694444741
2/28/2015 2.925057922 -0.775693001 1.677247266
3/31/2015 2.936275163 -0.59490085 1.59784541
4/30/2015 2.971328509 -0.510777104 1.573188868
5/31/2015 2.983424192 -0.504103165 1.48467636
6/30/2015 3.098311817 -0.734124079 1.565791842
7/31/2015 3.137932553 -0.893075009 1.494807788
8/31/2015 3.165293795 -0.826656492 1.532340619
9/30/2015 3.220363126 -0.780058651 1.513522629
10/31/2015 3.228310303 -0.974441675 1.502927918
11/30/2015 3.18166454 -0.764555969 1.456861756
12/31/2015 3.232125367 -0.703167199 1.406454999
1/31/2016 3.247373448 -0.544505711 1.702958654
2/29/2016 3.221791736 -0.548704938 1.81642654
3/31/2016 3.190329718 -0.720315248 1.890192791
4/30/2016 3.208481326 -0.607637185 1.943087815
5/31/2016 3.309316984 -0.775696163 2.071738109
6/30/2016 3.284530919 -0.844782314 2.078468979
7/31/2016 3.281505117 -0.845972031 2.160789375
8/31/2016 3.318357961 -0.587921952 2.204575456
9/30/2016 3.386339993 -0.583239739 2.161679507
10/31/2016 3.468361133 -0.507313607 2.273411154
11/30/2016 3.584449071 -0.867246148 2.284453285
12/31/2016 3.640101202 -0.89902976 2.370232366
1/31/2017 3.611975444 -0.533626382 2.381591444
2/28/2017 3.619245327 -0.581395349 2.406521829
3/31/2017 3.598958279 -0.591915113 2.087532393
4/30/2017 3.521706938 -0.926410603 2.185086019
5/31/2017 3.425732489 -0.961861975 2.067540333
6/30/2017 3.409079134 -0.786519083 2.049423057
7/31/2017 3.385960199 -0.659508745 1.872605754
8/31/2017 3.453925337 -0.941673778 1.853961151
9/30/2017 3.36577953 -1.267466059 2.00414651
10/31/2017 3.361310133 -0.990040078 2.086926526
11/30/2017 3.299225692 -0.874833104 2.064278262
12/31/2017 3.350523329 -0.837325349 2.089884232
1/31/2018 3.377500913 -0.756459768 2.137635493
2/28/2018 3.293501027 -0.82149819 2.214103841
3/31/2018 3.37196624 -0.666135617 2.581743458
4/30/2018 3.474432848 -0.374826792 2.381310926
5/31/2018 3.487121768 -0.135888571 2.443620327
6/30/2018 3.429962825 -0.357889054 2.476560233
7/31/2018 3.465955086 -0.452923003 2.611261126
8/31/2018 3.420284659 -0.671147663 2.54610446
9/30/2018 3.367438164 -0.490811093 2.591463415
10/31/2018 3.336172067 -0.552071018 2.473589537
11/30/2018 3.392358059 -0.224156648 2.554458393
12/31/2018 3.281269991 -0.25764636 2.643307055
1/31/2019 3.262245689 -0.30489028 2.353521892
2/28/2019 3.369707893 -0.522452418 2.216358319
3/31/2019 3.407492773 -0.702679404 2.054263185
4/30/2019 3.446362335 -0.917578074 2.201390455
5/31/2019 3.427883355 -0.862465731 2.057568879
6/30/2019 3.505134664 -0.429404152 2.038823575
7/31/2019 3.464796623 -0.516250854 2.060408768
8/31/2019 3.415996533 -0.076644581 2.048625649
9/30/2019 3.4758793 -0.216860665 1.901543183
10/31/2019 3.38466551 -0.315349353 1.963883932
11/30/2019 3.316394758 -0.514804405 1.777644452
12/31/2019 3.332348653 -0.527723122 1.833251319
1/31/2020 3.393938242 -0.8017786 2.01680186
2/29/2020 3.337566097 -0.443543916 2.06523205
3/31/2020 3.264041707 -0.624873814 1.882054095
4/30/2020 3.106618858 -1.259341547 1.216587032
5/31/2020 3.09363528 -1.564329256 1.39966063
6/30/2020 2.86414946 -1.700841352 1.472727273
7/31/2020 2.815691693 -0.958101969 1.603399704
8/31/2020 2.695982567 -0.419850025 1.742250041
9/30/2020 2.50192706 -0.462967643 1.98423666
10/31/2020 2.505445613 -0.540720826 1.886110503
11/30/2020 2.296512703 -0.187341772 1.894918993
12/31/2020 2.189269444 0.080136333 2.053230498
1/31/2021 2.03147406 0.34378898 2.273801645
2/28/2021 2.039468858 0.017213272 2.502878499
3/31/2021 2.006640021 0.509950122 3.201586627
4/30/2021 2.033626025 2.415799863 4.023925531
5/31/2021 2.093730647 3.663337913 4.160875854
6/30/2021 2.299404903 4.299025185 4.325766935
7/31/2021 2.366294379 4.004036656 4.548188808
8/31/2021 2.506415662 3.927351597 4.553937336
9/30/2021 2.840420038 4.176949091 4.419254455
10/31/2021 3.076283141 5.225238042 4.60978342
11/30/2021 3.451485793 5.590219652 5.123683155
12/31/2021 3.708082157 6.225357537 5.245664203
1/31/2022 4.01989225 6.918925475 5.05015022
2/28/2022 4.265223956 7.642390006 4.992173833
3/31/2022 4.493817862 7.464904036 4.945321437
4/30/2022 4.768038932 6.317471414 4.891606448
5/31/2022 5.08996191 5.679132009 4.780706532
6/30/2022 5.510340227 5.664809191 4.868656555
7/31/2022 5.900510928 5.431789001 4.451017234
8/31/2022 6.356100884 5.547970588 4.694633551
9/30/2022 6.761757088 5.711528338 4.965186418
10/31/2022 6.993595929 4.61713778 5.157150761
11/30/2022 7.273712074 3.842421331 5.020415409
12/31/2022 7.692240757 3.108689637 4.84482789
1/31/2023 7.924822449 2.589987901 5.096006618
2/28/2023 8.169421986 2.203579524 5.112599972
3/31/2023 8.204696979 2.451824056 4.867499717
4/30/2023 8.267017316 2.454419928 4.807700661
5/31/2023 8.186980621 2.447379012 4.701184175
6/30/2023 7.931208902 1.657443147 4.431438127
7/31/2023 7.740308909 1.114612674 4.582386559
8/31/2023 7.419360205 0.470290397 4.164560541
9/30/2023 7.152111305 0.151234312 4.154801085
10/31/2023 6.921008183 0.267781567 3.798661196
11/30/2023 6.721067162 0.118484893 3.523887646
12/31/2023 6.372766865 -0.134801761 3.376915756
1/31/2024 6.193078965 -0.607819409 3.402102141

Note: Percent change in select categories of the personal consumption expenditure (PCE) price index from 12 months ago. This figure plots data from the Bureau of Economic Analysis; data for January 2024 are Federal Reserve Board staff estimates based on available CPI and PPI data. The gray shaded bar indicates a period of business recession as defined by the National Bureau of Economic Research. The shaded period extends from February 2020 through April 2020.

Source: Bureau of Economic Analysis, Board of Governors of the Federal Reserve System, PCE Price Index.

Table 1. Summary of past six policy rate peak episodes
Start and end date of policy rate peaks preceding easing cycle Economic Growth Backdrop Inflation Backdrop
Mar. 1989-May 1989 (3 months) Moderating and later slowing growth Elevated inflation and tight labor markets:
PCE inflation 4.7%
Core PCE inflation 4.6%
Mar. 1995-June 1995 (4 months) Moderating growth Inflation close to 2% and tight labor markets:
PCE inflation 2.17%
Core PCE inflation 2.20%
Apr. 1997-Aug. 1998 (17 months) Strong domestic growth, but risks from strains in emerging market economies and associated financial turmoil Inflation close to 2% and tight labor markets:
PCE inflation 1.9%
Core PCE inflation 2%
June 2000-Dec. 2000 (7 months) Moderating growth Inflation close to 2.5% and tight labor markets:
PCE inflation 2.7%
Core PCE inflation 1.7%
July 2006-Aug. 2007 (14 months) Moderate growth despite housing sector weakness Inflation moderating and tight labor markets:
PCE inflation 3.4%
Core PCE inflation 2.5%
Jan. 2019-July 2019 (7 months) Solid growth, but rising downside risks from weaker global growth and trade uncertainty Inflation muted:
PCE inflation 1.5%
Core PCE inflation 1.8%

Note: The second and third columns summarize economic conditions as described in official accounts of monetary policy released at the time, such as FOMC statements, minutes of Committee meetings, and the Federal Reserve Board’s semiannual Monetary Policy Report.  The PCE inflation numbers are revised data.

Figure 4. Inflation around the Start of Easing Cycles
Core PCE Inflation (12 month percent change)

Percent

History 1989-92 1995-96 1998 2001-03 2007-08 2019-20
-24 3.187899942 2.707307251 1.903308474 1.343304251 2.193265225 1.43359371
-23 3.160947318 2.805415861 1.897252503 1.221773301 2.265220027 1.422587369
-22 3.240124279 2.793140738 1.964921346 1.144452584 2.306030492 1.541011105
-21 3.377948965 2.566983179 1.860398452 1.218233492 2.280881283 1.545376496
-20 3.447481572 2.607453817 1.853999341 1.21705811 2.142479822 1.576876513
-19 3.537198936 2.463137243 1.930225908 1.397993403 2.137706044 1.632037028
-18 3.533521686 2.246607165 1.937177256 1.29498383 2.167928845 1.644218118
-17 3.616639976 2.272831277 1.998660911 1.146867746 2.36218548 1.909183171
-16 3.857126555 2.397260274 1.89564698 1.431416993 2.408565958 1.884219287
-15 3.858783335 2.253722056 1.968084351 1.406693448 2.595788242 1.980902378
-14 3.99500388 2.135704994 1.846677541 1.48594928 2.545755452 1.936219818
-13 4.059172713 2.265137434 1.717541025 1.439597132 2.671351969 1.99580042
-12 4.121095952 2.267997708 1.62051427 1.538671768 2.60600546 1.895763
-11 4.274737631 2.191516903 1.533517506 1.72237031 2.496915148 1.960295291
-10 4.430072152 2.192731973 1.431567686 1.900870492 2.28421802 1.87090739
-9 4.336891522 2.265668372 1.452130354 1.706535814 2.315601683 2.010245188
-8 4.481184591 2.189496999 1.498369504 1.718526588 2.500451019 2.038079914
-7 4.432578249 2.178043052 1.377472296 1.742112856 2.556466816 1.852346867
-6 4.500783627 2.351200263 1.244052617 1.79197348 2.376989307 1.740152967
-5 4.627500046 2.296896207 1.231843575 1.872572717 2.210973688 1.607193918
-4 4.662491301 2.199925678 1.25607101 1.850020992 2.075642461 1.645636897
-3 4.713257063 2.284196153 0.979681708 1.818476806 1.987266291 1.57300059
-2 4.578541272 2.230252051 1.194869581 1.900478159 2.041106945 1.682503534
-1 4.422390844 2.092322241 1.433586893 1.871087848 1.984841307 1.666568633
0 4.378508131 2.039281607 1.206779095 2.005221651 2.102325801 1.759527917
1 4.216315307 2.169558429 1.250763507 2.035879863 2.183509194 1.647668901
2 4.059568984 2.148624204 1.237891698 1.932464328 2.335842201 1.643123693
3 3.94593533 2.15678507 1.353675451 2.02768806 2.403393025 1.472366317
4 3.750865789 2.035675581 1.343304251 1.942514425 2.193044213 1.5028958
5 3.733125741 2.144791743 1.221773301 2.092195735 2.072405395 1.552324112
6 3.724680641 2.006571742 1.144452584 2.122122122 2.169742906 1.65599899
7 3.675436128 1.972677038 1.218233492 2.04209488 2.083722669 1.49152345
8 3.550181971 1.959130245 1.21705811 1.21670678 2.14893195 0.932470903
9 3.789029094 1.860262642 1.397993403 1.787326712 2.214095203 0.950851704
10 3.977865943 1.864352764 1.29498383 1.814663114 2.244499232 0.908423918
11 3.938537313 1.854049673 1.146867746 1.738727405 2.217938594 1.163867086
12 3.945844068 1.884365833 1.431416993 1.418280648 2.043983278 1.365943879
13 4.07332678 1.728487609 1.406693448 1.432898723 1.634402144 1.444811289
14 4.068047337 1.903308474 1.48594928 1.448512676 1.390265834 1.366676918
15 4.356115911 1.897252503 1.439597132 1.569683436 1.137827888 1.427939961
16 4.358171143 1.964921346 1.538671768 1.658612176 0.905928146 1.553524679
17 4.333884805 1.860398452 1.72237031 1.593333159 0.887838675 1.715242881
18 4.182897579 1.853999341 1.900870492 1.538260472 0.762458643 1.753229382
19 4.031957119 1.930225908 1.706535814 1.687719619 0.92791762 2.255560018
20 4.149980568 1.937177256 1.718526588 2.435691952 0.822302676 3.220545488
21 3.933207776 1.998660911 1.742112856 1.805515694 0.720145852 3.64397685
22 3.651638384 1.89564698 1.79197348 1.697695613 0.62558293 3.949218862
23 3.550690783 1.968084351 1.872572717 1.768886344 0.650944039 4.009989229
24 3.646344506 1.846677541 1.850020992 1.780905673 0.725180444 4.018854118

Note: 12-month percent change in the personal consumption expenditures price index (PCE) 24 months before and after easing cycles start. Core refers to the price index excluding food and energy.  The vertical grey line marks the beginning of an easing cycle.  The figure shows six easing cycles with starting dates: June1989 (thin red line), July 1995 (thick black line), September 1998 (thin dotted purple line), January 2001 (thin dashed blue line), September 2007 (thick dotted green line), and August 2019 (thick dashed orange line).

Source: Bureau of Economic Analysis, PCE price index.

Headline PCE Inflation (12 month percent change)

Percent

History 1989-92 1995-96 1998 2001-03 2007-08 2019-20
-24 3.102372402 2.416409546 2.211927348 0.935874237 3.830020973 1.571908732
-23 3.108443628 2.454055244 2.2560913 0.932120681 3.551362371 1.757444307
-22 3.320694238 2.393546058 2.44099224 0.992787442 2.938408579 1.682040701
-21 3.599593972 2.353842785 2.363103953 1.354558038 2.883627678 1.793712905
-20 3.60923029 2.346091409 2.268743061 1.282177869 3.246937842 1.766409948
-19 3.75233064 2.190850162 2.320595099 1.399025905 3.02223537 1.757649496
-18 3.763086468 1.977243052 2.120203004 1.418110125 2.913671275 1.837607696
-17 3.812123676 2.059631532 1.915242196 1.462563987 3.102827102 1.998292058
-16 3.726827764 2.131317669 1.693394315 1.885544627 3.321534863 2.046628228
-15 3.517935325 1.980442742 1.825129177 1.833677323 3.511627907 2.266206537
-14 3.598651703 1.814177691 1.671071826 1.920646955 3.427345635 2.26830784
-13 3.715010781 2.02755754 1.655051008 2.054756094 3.335882589 2.338607056
-12 3.753187926 2.185708357 1.612972849 2.189136951 2.080026932 2.180411289
-11 3.801596481 2.246432408 1.4388386 2.568737913 1.67697017 2.009960159
-10 4.065225205 2.253287961 1.264445176 2.930879964 1.924673106 2.053098049
-9 3.962541453 2.105649191 1.125668679 2.350990147 2.286752234 1.941892227
-8 4.118232521 2.10624247 1.044211128 2.368948805 2.133263102 1.864690888
-7 4.12766754 2.148455369 0.781172043 2.684264751 2.389213247 1.497050366
-6 4.172194092 2.321504786 0.690637237 2.668814308 2.564898622 1.425810523
-5 4.304364043 2.265952917 0.716988648 2.475467095 2.330777916 1.509002797
-4 4.434495058 2.173286622 0.900913723 2.548096179 2.352983013 1.577147574
-3 4.626400534 2.320684693 0.686547646 2.514856127 2.317634121 1.456724968
-2 4.656794779 2.32941568 0.87507458 2.566327796 2.124726013 1.411363436
-1 4.843991464 2.180408015 0.933995742 2.484779352 1.873715125 1.440222446
0 4.921671497 1.987033889 0.632965166 2.701443237 2.534687051 1.421610833
1 4.705366602 1.971966263 0.722649621 2.537197196 3.088474888 1.304458201
2 4.44812041 1.929303832 0.721194638 2.108700088 3.599627055 1.331448901
3 4.152242864 2.020322952 0.844401069 2.373236752 3.471634208 1.33196921
4 3.877786595 1.823803549 0.935874237 2.55764914 3.387406817 1.539420259
5 3.944269663 1.95399382 0.932120681 2.391734686 3.272922728 1.697918492
6 3.929762887 1.973870425 0.992787442 2.101732509 3.191142571 1.642005794
7 3.906808754 1.95401957 1.354558038 2.096464414 3.139518677 1.146949231
8 4.159032287 2.073623274 1.282177869 1.313095944 3.282143933 0.411140455
9 4.271125137 2.111122626 1.399025905 1.531881699 3.81143894 0.448629938
10 4.276478485 2.130049814 1.418110125 1.321568153 4.135655024 0.705525326
11 3.804242924 2.029032592 1.462563987 1.062075069 3.980627306 0.900509613
12 3.65928283 2.116456742 1.885544627 0.665937116 3.667838353 1.165337012
13 3.890303897 1.994172014 1.833677323 0.679565078 2.671843148 1.247180832
14 3.898431925 2.211927348 1.920646955 0.943308241 0.925029334 1.118688739
15 4.576619218 2.2560913 2.054756094 1.187705321 0.129569013 1.153879439
16 4.98489426 2.44099224 2.189136951 0.988260264 -0.111103553 1.366487026
17 5.174769539 2.363103953 2.568737913 0.936200641 -0.131248444 1.615003159
18 5.078954181 2.268743061 2.930879964 1.192163512 -0.525751678 1.88520435
19 4.873264158 2.320595099 2.350990147 1.40294632 -0.567573959 2.713022122
20 4.481410005 2.120203004 2.368948805 1.932816675 -0.889212828 3.724613665
21 4.075768139 1.915242196 2.684264751 1.760451439 -1.01862469 4.155356627
22 3.706401504 1.693394315 2.668814308 1.929985021 -1.466009197 4.372402806
23 3.676657031 1.825129177 2.475467095 2.133673023 -1.100119771 4.533149673
24 3.872491145 1.671071826 2.548096179 2.346515358 -1.022748679 4.644842613

Note: 12-month percent change in the personal consumption expenditures price index (PCE) 24 months before and after easing cycles start. Core refers to the price index excluding food and energy.  The vertical grey line marks the beginning of an easing cycle.  The figure shows six easing cycles with starting dates: June1989 (thin red line), July 1995 (thick black line), September 1998 (thin dotted purple line), January 2001 (thin dashed blue line), September 2007 (thick dotted green line), and August 2019 (thick dashed orange line).

Source: Bureau of Economic Analysis, PCE price index.

Table 2. Summary of past six easing cycles
Start and end date of easing cycle Reason for starting easing cycle Reason for subsequent easing
June 1989-Sep. 1992 (40 months) Slowing growth and reduced concern of an upsurge in inflation 1991 Gulf War recession and sluggish recovery
July 1995-Feb. 1996 (8 months) Reduced inflation concerns No subsequent easing
Sept. 1998-Nov. 1998 (3 months) To cushion the U.S. economy from increased market volatility stemming from Russia’s debt default No subsequent easing
Jan. 2001-June 2003 (30 months) Weakening growth 9/11 terrorist attack, sluggish recovery, low inflation
Sep. 2007-Dec. 2008 (16 months) Financial stress and weakening growth Deepening financial crisis and Global Financial Crisis
Aug. 2019-Mar. 2020 (7 months) Downside risks from weaker global growth and trade uncertainty COVID-19 pandemic
Figure 5. Unemployment Rate around the Start of Easing Cycles

Unemployment Rate (percent)

History 1989-92 1995-96 1998 2001-3 2007-08 2019-20
-24 6.3 6.9 5.2 4.3 5 4.4
-23 6.2 6.8 5.2 4.4 5 4.3
-22 6.1 6.7 5.4 4.2 5 4.2
-21 6 6.8 5.4 4.3 4.9 4.2
-20 5.9 6.6 5.3 4.2 4.7 4.1
-19 6 6.5 5.2 4.3 4.8 4
-18 5.8 6.6 5.2 4.3 4.7 4.1
-17 5.7 6.6 5.1 4.2 4.7 4
-16 5.7 6.5 4.9 4.2 4.6 4
-15 5.7 6.4 5 4.1 4.6 3.8
-14 5.7 6.1 4.9 4.1 4.7 4
-13 5.4 6.1 4.8 4 4.7 3.8
-12 5.6 6.1 4.9 4 4.5 3.8
-11 5.4 6 4.7 4.1 4.4 3.7
-10 5.4 5.9 4.6 4 4.5 3.8
-9 5.6 5.8 4.7 3.8 4.4 3.8
-8 5.4 5.6 4.6 4 4.6 3.9
-7 5.4 5.5 4.6 4 4.5 4
-6 5.3 5.6 4.7 4 4.4 3.8
-5 5.3 5.4 4.3 4.1 4.5 3.8
-4 5.4 5.4 4.4 3.9 4.4 3.7
-3 5.2 5.8 4.5 3.9 4.6 3.6
-2 5 5.6 4.5 3.9 4.7 3.6
-1 5.2 5.6 4.5 3.9 4.6 3.7
0 5.2 5.7 4.6 4.2 4.7 3.6
1 5.3 5.7 4.5 4.2 4.7 3.5
2 5.2 5.6 4.4 4.3 4.7 3.6
3 5.2 5.5 4.4 4.4 5 3.6
4 5.3 5.6 4.3 4.3 5 3.6
5 5.3 5.6 4.4 4.5 4.9 3.6
6 5.4 5.6 4.2 4.6 5.1 3.5
7 5.4 5.5 4.3 4.9 5 4.4
8 5.4 5.5 4.2 5 5.4 14.8
9 5.3 5.6 4.3 5.3 5.6 13.2
10 5.2 5.6 4.3 5.5 5.8 11
11 5.4 5.3 4.2 5.7 6.1 10.2
12 5.4 5.5 4.2 5.7 6.1 8.4
13 5.2 5.1 4.1 5.7 6.5 7.8
14 5.5 5.2 4.1 5.7 6.8 6.8
15 5.7 5.2 4 5.9 7.3 6.7
16 5.9 5.4 4 5.8 7.8 6.7
17 5.9 5.4 4.1 5.8 8.3 6.4
18 6.2 5.3 4 5.8 8.7 6.2
19 6.3 5.2 3.8 5.7 9 6.1
20 6.4 5.2 4 5.7 9.4 6.1
21 6.6 5.1 4 5.7 9.5 5.8
22 6.8 4.9 4 5.9 9.5 5.9
23 6.7 5 4.1 6 9.6 5.4
24 6.9 4.9 3.9 5.8 9.8 5.1

Note: Unemployment rate 24 months before and after easing cycles start. The vertical grey line marks the beginning of an easing cycle.  The figure shows six easing cycles with starting dates: June1989 (thin red line), July 1995 (thick black line), September 1998 (thin dotted purple line), January 2001 (thin dashed blue line), September 2007 (thick dotted green line), and August 2019 (thick dashed orange line).

Source: Bureau of Labor Statistics.

Lessons for Current Monetary Policy

  • Is this time different? Yes, but every time is different
  • Policymakers must be vigilant and nimble because unanticipated shocks may occur
  • If the economy evolves as expected, it will likely be appropriate to begin dialing back policy restrain later this year
Last Update: February 22, 2024