Economics
The Great Inflation Mystery
The people who set interest rates don’t know what causes inflation, how to measure it, or how to move it up and down.
Illustration: Tomi Um for Bloomberg Businessweek
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The first principle of war is “know thine enemy.” But as Federal Reserve Chairman Jerome Powell and his colleagues raise interest rates to keep the U.S. economy from overheating, there’s a lot they don’t know about the foe they’re trying to contain: inflation.
Here are some of the things about inflation the Fed and other central banks are uncertain of: what causes it; what effects it has; what to count in measuring it (stock prices?); how low, or high, it should be; and how to move it up and down.