Jia Liu

The Consumer Price Index for January 2016 has attracted a lot of attention since it was released last Friday. But a look inside the numbers raises questions about its overall message of economic strength.

A negative interest rate means a country’s central bank charges a fee for banks to hold some of their money there, in an effort to spur the economy. Janet Yellen said this option remains on the table, although the economy would need to worsen. But the Fed just did the opposite.

With the recent market turmoil and the plunge in oil prices, as well as no meaningful evolution in economic conditions, the Fed’s decision today was not difficult to make. Lower oil prices and weak global economic growth would make the Fed more cautious about its tightening policy. The second interest rate increase in March has…

Fascinating as the free fall in the stock prices might be, stock prices are not directly relevant to consumers. The Consumer Price Index, released on Wednesday, sheds light on the prices that households experienced in December 2015. Most goods were cheaper, while services were more expensive. Consumers were paying more for services than for goods,…

In a recent article, the Wall Street Journal reviewed what economic forecasters got right and wrong in 2015. Among what they got wrong is the inflation forecast. In December 2014, Fed officials forecast an inflation rate of between 1 and 1.6 percent, but it turned out to be only 0.4 percent by November (December inflation…

Americans have spent a lot of energy worrying about what might happen when the Federal Reserve Bank raised interest rates. They have worried that an increase could hurt economic growth, and could be a setback for investors. But a week after the increase, the effects have so far been pretty mild.

Normally, raising interest rates is a form of a contractionary monetary policy, meaning that the central bank believes the economy is overheated or strong enough, so that higher rates are necessary to prevent future excessive inflation. But this is not the case today. Inflation has been stubbornly low in the past few years, which is…

The Federal Open Market Committee, the policy making arm of the Federal Reserve, explicitly points out in its October meeting statement that it will assess economic progress to determine whether it will raise the interest rate at its next meeting. The committee chose that language instead of saying “determine how long to maintain this target…

The Fed didn’t take action in September, leaving short-term interest rates near zero since December 2008. This was consistent with the majority of market participants’ expectations.