s simple dynamics, report prepared for the 2017 u. s. monetary policy forum, sponsored by the initiative on global markets at the university of chicago booth school of business, held in new york, march 3, https : / / research. chicagobooth. edu / % 7e / media / 806fc2ded9644b5da99518d2b07cc637. pdf. - 7estimates from models and slowly evolving surveys must be balanced against the cost of treating the noise in the asset price as a signal. there is no unique way to do this, and judgment is required. in conclusion, while my colleagues and i are attuned to the potential for a hall of mirrors problem, in my experience this affliction is one the federal reserve guards against and does not suffer from. my colleagues and i do look at developments in asset markets, but never in isolation and always in the context of balancing asset market signals with complementary signals from surveys and econometric models. it is fair to say that when signals from all three sources line up in the same direction — as, for example, has been the case with market -, survey -, and model - based estimates of r * — the effect of those combined signals, at least on my thinking about the policy path, is more material than when the signals provide conflicting interpretations. thank you for your attention. i look forward to hearing from the other panelists and to our discussion.

* and long - run expected inflation. to be sure, financial market signals are noisy, and day - to - day movements in asset prices are unlikely to tell us much about the cyclical or structural position of the economy, let alone r * and expected inflation. however, persistent shifts in financial market conditions can be informative. signals derived from financial market data, when combined with signals revealed from surveys of households and firms along with the filtered estimates from econometric models, can together provide valuable and reasonably robust foundations for real - time inference about the direction of travel in r * and expected inflation. for example, a “ straight read ” of interest rate futures prices provides one source of high - frequency information about the destination for the federal funds rate expected by market participants. the destination for the federal funds rate implied by a straight read of futures prices is in turn the sum of the market - implied r * plus market - implied expected inflation. but these signals from interest rate futures are only a pure measure of the - 5expected policy rate path under the assumption of a zero risk premium. for this reason, it is useful to compare policy rate paths derived from market prices with the path obtained from surveys of market participants, which, while subject to measurement error, should not be contaminated with a term premium. market - and survey - based estimates of the policy rate path are often highly correlated. but when there is a divergence between the path or destination for the policy rate implied by the surveys and a straight read of interest rate derivatives prices, i place at least as much weight on the survey evidence — for example, derived from the surveys of primary dealers and market participants conducted by the federal reserve bank of new york — as i do on the estimates obtained from market prices. finally, as another reality check, i, of course, always consult the latest estimate of r * produced by the laubach and williams ( 2003 ) unobservable components state - space model, which, i should point out, includes no information on asset prices other than the short - term nominal interest rate itself. 6 quotes from the treasury inflation - protected securities ( tips ) market can provide valuable information about both r * and expected inflation. tips market data, together with nominal treasury yields, can be used to construct measures of “ breakeven inflation ” or inflation compensation that provide a noisy signal of market expectations of future inflation. but, again, a straight read of breakeven inflation based on tips curve forward real