Macro glossary
Inflation
A sustained increase in the general price level of goods and services.
Definition
Inflation is measured by CPI, PCE, and the GDP deflator, each with different scope. Persistent above-target inflation forces tighter monetary policy, raises recession risk, and compresses real wages. 'Transitory' and 'sticky' inflation distinctions became central to the 2021-24 macro debate.
Related indicators
Related terms
PCE (Personal Consumption Expenditures)
The Fed's preferred inflation measure and the largest component of US GDP.
Stagflation
The simultaneous occurrence of high inflation, high unemployment, and stagnant demand.
Federal Funds Rate
The overnight interbank lending rate targeted by the Federal Open Market Committee.