Inflation uncertainty weakens U.S. monetary policy effectiveness, dampening economic impact.
The study looked at how uncertainty about inflation affects how well monetary policy works in the U.S. economy. By using a special method to analyze the data, the researchers found that when inflation uncertainty is high, the impact of monetary policy on the economy is weaker. This is because factors like people being cautious with their money and the way interest rates are affected by uncertainty can make monetary policy less effective. So, when inflation uncertainty is high, monetary policy doesn't have as big of an impact on the economy.