For most of the 1990s, forecasters have been predicting an upturn in inflation. Yet, over that same period, the United States has experienced stable or declining inflation. Why have forecasts been at odds with reality? And why does it matter? In this article, Dean Croushore considers some answers to these questions and explains why inflation is the economic surprise of the decade.

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Copyright © 1998 Federal Reserve Bank of Philadelphia. This article first appeared in Business Review - Federal Reserve Bank of Philadelphia 4 (July/August 1998): 3-12.

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