Is inflation sticky?

New Keynesian sticky-price models predict that monetary policy can affect real variables. However, they also predict that inflation can be reduced without depressing output or employment. In fact, bringing down inflation is costly, presenting a challenge to the New Keynesian model. Two departures from the New Keynesian model predict costly disinflation. One assumes sticky inflation rather than sticky prices, while the other assumes less-than-perfectly rational expectations. Taking into account information from surveys of inflation expectations, I find the evidence suggests that inflation is not sticky and that inflation expectations are less than perfectly rational.