http://www.frbsf.org/publications/economics/letter/ Short essays on current topics by Research economists. http://www.frbsf.org/publications/economics/letter/2009/el2009-34.htm Predicting the course of inflation is one of the most important challenges facing monetary policymakers. Useful aids to such prediction are the measures of expected future inflation obtained from prices in government bond markets. An examination of recent inflation-indexed and non-indexed U.S. Treasury bond yields suggests that financial market participants believe that the probability of prolonged deflation has become fairly small. FRBSF <em>Economic Letter</em> Mon, 02 Nov 2009 08:00:00 GMT http://www.frbsf.org/publications/economics/letter/2009/el2009-34.htm http://www.frbsf.org/publications/economics/letter/2009/el2009-33.html As the U.S. housing market has moved from boom in the middle of the decade to bust over the past two years, the sources of mortgage funding have changed dramatically. The government-sponsored enterprises—Fannie Mae, Freddie Mac, and Ginnie Mae—now own or guarantee an overwhelming share of originations. At the same time, non-agency mortgage securitization and loans retained in lender portfolios have largely dried up. FRBSF <em>Economic Letter</em> Mon, 26 Oct 2009 07:00:00 GMT http://www.frbsf.org/publications/economics/letter/2009/el2009-33.html http://www.frbsf.org/publications/economics/letter/2009/el2009-32.html The Federal Reserve and other central banks have responded to the current financial crisis by taking a range of aggressive policy actions aimed at reviving credit markets. In particular, the Fed has pushed the federal funds rate, its key policy instrument, to historically low levels. Research suggests that overall credit conditions since late 2007 have remained tighter than would have been expected based on historical experience and that this tightness may be partly offsetting the Fed's policy actions. FRBSF <em>Economic Letter</em> Mon, 19 Oct 2009 07:00:00 GMT http://www.frbsf.org/publications/economics/letter/2009/el2009-32.html http://www.frbsf.org/publications/economics/letter/2009/el2009-31.html Disagreement among economic forecasters about the future path of inflation has risen substantially since the start of the recession. The nature of this disagreement varies with the forecast time horizon, with some forecasters expecting much lower short-run inflation and others anticipating much higher long-run inflation. This variation may complicate the Federal Reserve’s monetary policy communications strategy. FRBSF <em>Economic Letter</em> Mon, 05 Oct 2009 07:00:00 GMT http://www.frbsf.org/publications/economics/letter/2009/el2009-31.html