According to PANews, Michael Bauer, Carolin Pflueger, and Adi Sunderam published a report at the Jackson Hole Annual Meeting saying that after the Federal Reserve launched the interest rate hike cycle in 2022, the bond market became more sensitive to inflation data.
The report pointed out that the public did not understand the FOMC's monetary policy strategy before raising interest rates. After raising interest rates, the sensitivity of interest rates to surprises in inflation data has increased significantly.
An increase in the perceived inflationary response could help the transmission of monetary policy to the real economy and improve the Fed's inflation-unemployment trade-off.
