E31 - Price Level; Inflation; Deflation

• Monetary Policy Under Okun’s Hypothesis

  Staff working paper 2026-3 Felipe Alves, Giovanni L. Violante

  The current monetary policy framework of the Fed intends to be more ’inclusive’ by running the economy hot for longer during expansions.

  Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, E24, E3, E31, E32, E5, E52, J, J2, J24, J6, J64 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission

• Channels of Transmission: How Mortgage Rates Affect House Prices and Rents in Canada

  Staff analytical paper 2026-2 Nishaad Rao, Tao Wang

  We use Canadian data to examine how monetary policy affects house prices and the consumer price index for rent through exogenous changes in the mortgage interest rates. It finds that the price and rent impacts operate through various channels and that these impacts vary by region.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E3, E31, E5, E52, R, R2, R21 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission

• The Sectoral Origins of Post-Pandemic Inflation

  Staff working paper 2025-37 Jan David Schneider

  This paper quantifies the contribution of sector-specific supply and demand shocks to personal consumption expenditure (PCE) inflation. It derives identification restrictions that are consistent with a large class of dynamic stochastic general equilibrium models with production networks.

  Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C50, E, E3, E31, E32 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures

• Inflation Expectations in Action: Exploring Agents’ Behaviour in a Period of High Inflation

  Staff discussion paper 2025-18 Naveen Rai, Hayley Touchburn, Matt West

  Inflation expectations are important to monetary policy decision-makers. Using survey evidence, we examine how firms and consumers react to their inflation expectations during the post-pandemic period of high inflation.

  Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C8, C83, D, D8, D84, E, E3, E31 Research Theme(s): Monetary policy, Inflation dynamics and pressures

• Pulse check: Measuring underlying inflation and its drivers

  Staff analytical note 2025-29 Luis Uzeda

  This note presents PULSE, a new measure of underlying inflation in Canada based on a dynamic factor model estimated on disaggregated inflation data. PULSE captures the persistent component of inflation and decomposes it into broad-based and sector-specific inflationary pressures.

  Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C5, C55, E, E3, E31, E5, E52 Research Theme(s): Financial system, Financial system regulation and oversight, Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures

• United in Booms, Divided in Busts: Regional House Price Cycles and Monetary Policy

  Staff working paper 2025-36 Ulrich Roschitsch, Hannes Twieling

  This paper shows that regional disparities in house price growth are more pronounced during house price busts than during booms. To explain this observation we construct a two-region currency union model incorporating a housing sector and extrapolative belief updating regarding house prices. To solve the model, we propose a new method that efficiently handles extrapolative belief updating in a wide class of structural models.

  Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E31, E32, E5, E52, F, F4, F45 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Real economy and forecasting

• Credit Conditions, Inflation, and Unemployment

  Staff working paper 2025-26 Chao Gu, Janet Hua Jiang, Liang Wang

  We identify two channels that affect the relationship between inflation and unemployment. First, inflation lowers wages because unemployed suffer more from inflation than employed, generating a positive relationship. Second, inflation increases firms’ financing costs, generating a negative relationship. Improvements in firm financing conditions can induce the relationship to switch signs.

  Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E24, E3, E31, E4, E44, E5, E51 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting

• Monetary Policy Transmission with Endogenous Central Bank Responses in TANK

  Staff working paper 2025-21 Lilia Maliar, Chris Naubert

  We study how the transmission of monetary policy innovations is affected by the endogenous response of the central bank to macroeconomic aggregates in a two-agent New Keynesian model. We focus on how the stance of monetary policy and the fraction of savers in the economy affect transmission.

  Content Type(s): Staff research, Staff working papers JEL Code(s): C, C6, C61, C62, C63, E, E3, E31, E5, E52 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission

• Assessing tariff pass-through to consumer prices in Canada: Lessons from 2018

  Staff analytical note 2025-18 Alexander Lam

  US trade protectionism is making the economic outlook increasingly uncertain. To assess how consumer prices may respond to tariffs, we examine a tariff episode from 2018 using detailed microdata and the synthetic control method.

  Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E3, E30, E31, F, F1, F10, F13, F14 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, International trade, finance and competitiveness

• Natural disasters and inflation in Canada

  Staff analytical note 2025-8 Thibaut Duprey, Victoria Fernandes

  How do storms, floods and wildfires affect consumer prices? In the short term, natural disasters can significantly increase volatility in Canada-wide inflation. Over the long term, natural disasters influence inflation in shelter prices, especially when provincial output is already weak relative to trend.

  Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E3, E31, Q, Q5, Q54 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, Climate change