Research and Insights on Inflation and Monetary Policy

High inflation continues to have a significant impact on communities across the United States. Bringing inflation back to the FOMC’s longer-run average goal of 2% is currently a top priority for the Fed. This page provides a searchable archive of recent insights and research from the SF Fed on inflation, monetary policy, economic conditions, financial conditions, and the Fed’s ongoing efforts to restore price stability.

Featured Inflation Content

Will a Cooler Labor Market Slow Supercore Inflation?

Given steady declines in price inflation for core goods and expectations that rent inflation will moderate over time, the outlook for nonhousing core services—or “supercore”—inflation has grown in importance. State-level data document a typically weak relationship between this indicator and unemployment rates, highlighting the stickiness of supercore inflation.

Reducing Inflation along a Nonlinear Phillips Curve
Combining estimates of the Beveridge curve and a nonlinear version of the Phillips curve implies that inflation can fall in conjunction with a “soft landing” for the economy if labor market easing is achieved mainly by reducing job vacancies rather than increasing unemployment.

How Much Do Labor Supply Costs Drive Inflation?
Tight labor markets have raised concerns about the role of labor costs in persistently high inflation readings. Policymakers are paying particular attention to nonhousing services inflation, which is considered most closely linked to wages.

Inflation and Monetary Policy Indicators and Data

Cyclical and Acyclical Core PCE Inflation

PCE Inflation Dispersion

Supply- and Demand-Driven PCE Inflation

Proxy Funds Rate

Key Inflation Content (and how Monetary Policy seeks to address it)

Global Supply Chain Pressures and US Inflation

Global supply chain disruptions following the onset of the COVID-19 pandemic contributed to the rapid rise in U.S. inflation over the past two years. However, supply chain pressures began easing substantially in mid-2022, contributing to the slowdown in inflation.

Mix of Inflation Contributors Is Changing

Core services inflation has been rising over the past year, while goods inflation and energy inflation have been moderating in recent months. This means the mix of inflation contributors is changing, with services becoming a more substantial part of overall inflation.

Forward Looking Policy in a Real-Time World

Restoring price stability is a key part of the Fed’s mandate, and it is what the American people expect.

Changing Consumption Patterns

Goods consumption is moderating while services consumption is rising back toward its pre-pandemic trend line. Each of these adjustments suggest the economy may be normalizing.

Monetary Policy Stance Is Tighter than Federal Funds Rate

A proxy federal funds rate that incorporates data from financial markets shows that, since late 2021, broader monetary policy has been substantially tighter than the federal funds rate alone.

What If? Monetary Policy in Hindsight

A study on the timing of monetary policy suggests that, if the Federal Reserve had begun tightening policy in March 2021, inflation would have been only about 1 percentage point lower as of June 2022, while unemployment would be about 2 percentage points higher.

How Much Do Supply and Demand Drive Inflation?

Separating the underlying data from the personal consumption expenditures price index into supply- versus demand-driven categories reveals that supply factors explain about half of the run-up in recent inflation levels while demand factors are responsible for about one-third.

Can the News Drive Inflation Expectations?

Analyzing the volume and sentiment of daily news articles on inflation suggests that one-fourth of the increased gap between higher inflation expectations for households compared with professional estimates can be attributed to heightened negative media coverage.

Recent Content on Inflation