Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We present a novel text-based measure on the credibility of the now infamous signal from the Federal Reserve regarding transitory inflation in 2021. Specifically, we construct a daily sentiment index from an extensive set of news articles. The measure illustrates a declining sentiment of trust in the signal as U.S. inflation persisted and accelerated through 2021. Daily VAR estimates show that credibility diminishes significantly following positive inflation surprises and that negative credibility shocks boost inflation expectations over the short and long-run.