Macro Musings with David Beckworth Rich Clarida on Navigating Monetary Policy in Choppy Waters
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Apr 20, 2026 
Rich Clarida, former Fed vice chair, Columbia economist and PIMCO managing director, returns to discuss monetary policy challenges. He covers why inflation stayed high, how central banks handle negative supply shocks, the role of nominal GDP as a cross-check, shifts in the Fed's balance sheet regime, and the potential of synthetic FOMC and AI simulations.
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How Central Banks Delivered A Near Soft Landing
- Central banks achieved a near soft landing from very high inflation by belated but effective tightening and anchored expectations.
- Core PCE fell from ~6% toward ~2.4% through 2024 despite no deep recession, showing policy worked once hikes began.
Markets Are Pricing Fiscal Risk Through Higher Yields
- Large persistent fiscal deficits matter but markets have repriced via higher term premia in yields rather than leaving rates low.
- Ten-year Treasuries now trade in the mid-4s, reflecting compensation for fiscal risk and higher real rates.
Average Multiple Inflation Expectations Not One Indicator
- Use a broad suite of inflation expectation indicators rather than a single measure; the Fed built a statistical common-inflation-expectations model.
- Short-horizon expectations matter for wages/prices, so monitor both short and long surveys and market break-evens.