Federal Reserve's Communication Shifts Inflation Expectations, Flattening Phillips Curve.
The Federal Reserve's actions affected how people expect prices to change in the future. By setting a clear goal for inflation, they made people more certain about future prices in the US. This made it harder to predict inflation based on how many people are out of work. In Japan, this didn't work as well. The Federal Reserve's communication about inflation goals may have caused people to expect prices to rise less than 2 percent.