Economics
Low Inflation Is Federal Reserve’s Maddening Unsolved Mystery
- Research points the finger at a long line of usual suspects
- Inflation expectations may be the Fed’s person of interest
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It’s like a cold case that still baffles investigators. After years of rock-bottom interest rates and with unemployment at 3.8 percent, where is the inflation? It’s a whodunit that hangs heavily over the Federal Reserve.
Not only is this clouding the central bank’s monetary policy decisions, it begs questions about how policy makers should pursue their mandates for maximum employment and stable prices. That’s a big reason why the Fed has just kicked off a year-long review of how best to achieve those goals.