Policymakers' Uncertainty
This website disseminates the empirical policymakers' uncertainty (PMU) measures from Cieslak, Hansen, McMahon, and Xiao (2024). Using transcripts of the FOMC meetings, we measure the types of uncertainty perceived by the Federal Open Market Committee (FOMC) and quantify their effects on its policy stance. The data is available for download.
Figure 1 : Inflation PMU and policy rate
Note: The figure superimposes the inflation PMU of FOMC members measured in the economy round of the meeting against the policy rate: FFR target and the shadow rate from Wu and Xia (2016). The PMU is smoothed over the last eight meetings.
Figure 2 : Inflation PMU and expected inflation
Note: Panel A superimposes inflation PMU against the deviation of expected inflation from the target, which is constructed by orthogonalizing the four-quarter Greenbook CPI inflation forecast residualized with respect to the trend inflation. Panel B superimposes inflation PMU against inflation sentiment, constructed from FOMC members’ statements. Increasing inflation sentiment indicates the balance of views toward rising inflation. The text-based series are smoothed averages over the last eight FOMC meetings.