Is the natural rate hypothesis dead? But what does it mean to question or reject the concept of a natural rate? Current inflation does depend on inflation, but it also depends one-for-one on expected inflation:Inflation = f(U) + expected inflationwhere f(U) means some function of the unemployment rate. Meanwhile, expected inflation presumably reflects past inflation. So trying to keep U very low means raising inflation ever higher to keep ahead of expectations, which is not a sustainable strategy.

Source: New York Times May 06, 2018 23:07 UTC