This data package includes the underlying data to replicate the charts and calculations presented in US Monetary Policy and the Recent Surge in Inflation, PIIE Working Paper 24-13.

If you use the data, please cite as:

Reifschneider, David. 2024. US Monetary Policy and the Recent Surge in Inflation. PIIE Working Paper 24-13. Washington: Peterson Institute for International Economics.

The inflation rate in the United States declined significantly between June 2022 and January 2025, despite rising inflationary pressures towards the end of 2024. The peak inflation rate was recorded in June 2022, at 9.1 percent. In August 2023, the Federal Reserve's interest rate hit its highest level during the observed period, at 5.33 percent, and remained unchanged until September 2024, when the Federal Reserve implemented its first rate cut since September 2021. By January 2025, the rate dropped to 4.33 percent, signalling a shift in monetary policy. What is the Federal Reserve interest rate? The Federal Reserve interest rate, or the federal funds rate, is the rate at which banks and credit unions lend to and borrow from each other. It is one of the Federal Reserve's key tools for maintaining strong employment rates, stable prices, and reasonable interest rates. The rate is determined by the Federal Reserve and adjusted eight times a year, though it can be changed through emergency meetings during times of crisis. The Fed doesn't directly control the interest rate but sets a target rate. It then uses open market operations to influence rates toward this target. Ways of measuring inflation Inflation is typically measured using several methods, with the most common being the Consumer Price Index (CPI). The CPI tracks the price of a fixed basket of goods and services over time, providing a measure of the price changes consumers face. At the end of 2023, the CPI in the United States was 158.11 percent, up from 153.12 a year earlier. A more business-focused measure is the producer price index (PPI), which represents the costs of firms.

The enduring discourse regarding the effectiveness of interest rate policy in mitigating inflation within developing economies is characterized by the interplay of structural and supply-side determinants. Moreover, extant academic literature fails to resolve the direction of causality between inflation and interest rates. Nevertheless, the prevalent adoption of interest rate-based monetary policies in numerous developing economies raises a fundamental inquiry: What motivates central banks in these nations to consistently espouse this strategy? To address this inquiry, our study leverages wavelet transformation to dissect interest rate and inflation data across a spectrum of frequency scales. This innovative methodology paves the way for a meticulous exploration of the intricate causal interplay between these pivotal macroeconomic variables for twenty-two developing economies using monthly data from 1992 to 2022. Traditional literature on causality tends to focus on short- and long-run timescales, yet our study posits that numerous uncharted time and frequency scales exist between these extremes. These intermediate scales may wield substantial influence over the causal relationship and its direction. Our research thus extends the boundaries of existing causality literature and presents fresh insights into the complexities of monetary policy in developing economies. Traditional wisdom suggests that central banks should raise interest rates to combat inflation. However, our study uncovers a contrasting reality in developing economies. It demonstrates a positive causal link between the policy rate and inflation, where an increase in the central bank’s interest rates leads to an upsurge in price levels. Paradoxically, in response to escalating prices, the central bank continues to heighten the policy rate, thereby perpetuating this cyclical pattern. Given this observed positive causal relationship in developing economies, central banks must explore structural and supply-side factors to break this cycle and regain control over inflation.

This data package includes the underlying data and files to replicate the calculations, charts, and tables presented in Inflation and Activity: Two Explorations and Their Monetary Policy Implications, PIIE Working Paper 15-19. If you use the data, please cite as: Blanchard, Olivier, Eugenio Cerutti, and Lawrence H. Summers. (2015). Inflation and Activity: Two Explorations and Their Monetary Policy Implications. PIIE Working Paper 15-19. Peterson Institute for International Economics.

In January 2025, global inflation rates and central bank interest rates showed significant variation across major economies. Most economies initiated interest rate cuts from mid-2024 due to declining inflationary pressures. The U.S., UK, and EU central banks followed a consistent pattern of regular rate reductions throughout late 2024. In early 2025, Russia maintained the highest interest rate at 21 percent, while Japan retained the lowest at 0.5 percent. Varied inflation rates across major economies The inflation landscape varies considerably among major economies. China had the lowest inflation rate at 0.5 percent in January 2025. In contrast, Russia maintained a high inflation rate of 9.9 percent. These figures align with broader trends observed in early 2025, where China had the lowest inflation rate among major developed and emerging economies, while Russia's rate remained the highest. Central bank responses and economic indicators Central banks globally implemented aggressive rate hikes throughout 2022-23 to combat inflation. The European Central Bank exemplified this trend, raising rates from 0 percent in January 2022 to 4.5 percent by September 2023. A coordinated shift among major central banks began in mid-2024, with the ECB, Bank of England, and Federal Reserve initiating rate cuts, with forecasts suggesting further cuts through 2025 and 2026.

India CPI Inflation Projection: Annual: 4th Monetary Policy Statement data was reported at 4.500 % in 2025. This records a decrease from the previous number of 5.400 % for 2024. India CPI Inflation Projection: Annual: 4th Monetary Policy Statement data is updated yearly, averaging 5.350 % from Mar 2022 (Median) to 2025, with 4 observations. The data reached an all-time high of 6.700 % in 2023 and a record low of 4.500 % in 2025. India CPI Inflation Projection: Annual: 4th Monetary Policy Statement data remains active status in CEIC and is reported by Reserve Bank of India. The data is categorized under India Premium Database’s Inflation – Table IN.IA002: RBI Monetary Policy Statement: Inflation Projection.

From January 2022 to July 2024, a global trend emerged as almost all advanced and emerging economies increased their central bank policy rates. This widespread tightening of monetary policy was in response to inflationary pressures and economic challenges. However, a shift occurred in the latter half of 2024, with most countries beginning to lower their rates, potentially signaling a new phase in the global economic cycle and monetary policy approach.

This data package includes the underlying data to replicate the charts, tables, and calculations presented in Fiscal policy and the pandemic-era surge in US inflation: Lessons for the future, PIIE Working Paper 24-22.

If you use the data, please cite as:

Dynan, Karen, and Douglas Elmendorf. 2024. Fiscal policy and the pandemic-era surge in US inflation: Lessons for the future. PIIE Working Paper 24-22. Washington: Peterson Institute for International Economics.

I estimate various backward-looking and forward-looking Taylor rules augmented with variables that indicate proximity to an election and whether the Fed Chair and the majority of a chamber of Congress share the same political party affiliation to investigate whether Congress has influenced Federal Reserve policy from 1961 to 2020. I find that the Fed is susceptible to pressures from the Senate. In line with previous work, left-leaning politicians exhibit a higher tolerance for inflation. This results in the federal funds rate being lower by about 2.35 points when the Democratic party has a Senate majority. Second, while I find some evidence that the House and the Fed Chair sharing partisan affiliation results in tighter policy, this result is not robust to alternative measures of inflation. Finally, I find persuasive evidence that Congressional pressures on the Fed do not create a political monetary cycle around elections.

ABSTRACT This paper aims to evaluate the performance of the monetary policy of inflation targeting regime in the Latin America countries from 2001 to 2014, with monthly data. For this purpose, a VEC model (vector error correction) is applied to running data to analyze the long-term function and the impulse response function. The results pointed out that the adoption of the target system has contributed to reduce the inflation rate and its volatility and the fluctuations in the rate of growth in activity level. The estimated parameters of the long-term speed of adjustment of the price index have indicated strong reaction by the monetary authorities to change inflation rate via short-term interest rate. These adjustments are also noted in the level of activity and the exchange rate for most countries, but with less level of speed. The impulse response function confirmed these results. Therefore, the monetary policy was effective to control inflation, especially in Peru, Colombia and Chile. In Brazil and Mexico, the effectiveness of monetary policy has only been observed more recently.

India CPI Inflation Projection: Quarterly: 3rd Monetary Policy Statement data was reported at 4.400 % in Jun 2025. This records an increase from the previous number of 4.300 % for Mar 2025. India CPI Inflation Projection: Quarterly: 3rd Monetary Policy Statement data is updated quarterly, averaging 4.800 % from Sep 2017 (Median) to Jun 2025, with 27 observations. The data reached an all-time high of 7.100 % in Sep 2022 and a record low of 3.000 % in Sep 2017. India CPI Inflation Projection: Quarterly: 3rd Monetary Policy Statement data remains active status in CEIC and is reported by Reserve Bank of India. The data is categorized under India Premium Database’s Inflation – Table IN.IA002: RBI Monetary Policy Statement: Inflation Projection.

The Federal Reserve's balance sheet has undergone significant changes since 2007, reflecting its response to major economic crises. From a modest 0.9 trillion U.S. dollars at the end of 2007, it ballooned to approximately 6.76 trillion U.S. dollars by March 2025. This dramatic expansion, particularly during the 2008 financial crisis and the COVID-19 pandemic - both of which resulted in negative annual GDP growth in the U.S. - showcases the Fed's crucial role in stabilizing the economy through expansionary monetary policies. Impact on inflation and interest rates The Fed's expansionary measures, while aimed at stimulating economic growth, have had notable effects on inflation and interest rates. Following the quantitative easing in 2020, inflation in the United States reached eight percent in 2022, the highest since 1991. However, by November 2024, inflation had declined to 2.7 percent. Concurrently, the Federal Reserve implemented a series of interest rate hikes, with the rate peaking at 5.33 percent in August 2023, before the first rate cut since September 2021 occurred in September 2024. Financial implications for the Federal Reserve The expansion of the Fed's balance sheet and subsequent interest rate hikes have had significant financial implications. In 2023, the Fed reported a negative net income of 114.3 billion U.S. dollars, a stark contrast to the 58.84 billion U.S. dollars profit in 2022. This unprecedented shift was primarily due to rapidly rising interest rates, which caused the Fed's interest expenses to soar to over 281 billion U.S. dollars in 2023. Despite this, the Fed's net interest income on securities acquired through open market operations reached a record high of 174.53 billion U.S. dollars in the same year.

Research data associated with the manuscript: [1] Górajski, M., Kuchta, Z., Leszczyńska-Paczesna, A., 2022, Price-setting heterogeneity and robust monetary policy in a two-sector DSGE model of a small open economy

The Readme file describes all user-defined MATLAB functions that solve the robust monetary policy rules and replicate the main results from Section 4. We group them into four folders: main_estimation, main_robust_simple_rules, main_sensitivity_analysis, and main_simulations.

This work is supported by the National Science Centre in Poland under Grant No. 2017/26/D/HS4/00942.

Abstract This paper offers a welfare analysis of robust simple monetary policy rules in a multi-sector dynamic stochastic general equilibrium model of a small open economy. The model assumes price-setting heterogeneity between two sectors of the economy: the production of food and energy goods, and the remaining consumption goods and services. We determine monetary policy rules that minimise the Bayesian risk and take into account the uncertainty of the economic environment. Using this approach we propose a robust price index. To illustrate an application, we estimate the model on Polish data and compare expected welfare losses under implementable monetary policy rules. We show that reacting to core inflation improves social welfare more than responding to headline inflation. Moreover, the choice between the robust headline and core inflation rules may depend on country-specific factors, such as the share of food and energy in a consumption bundle or the level of competitiveness.

This paper explores how Japan’s aging population impacts the politics of monetary policy. Previous research suggest that the elderly have a variety of distinct policy preferences. Given that elderly voters also have higher voting rates, the rapid greying of the population could have significant effects on distributive struggles over economic policy across much of the developed world. In Japan, aging is advancing rapidly, and the central bank has engaged in massive monetary stimulus to induce inflation, which existing work suggests the elderly should oppose. Analyzing results from three surveys, this paper has three central findings: (1) the elderly tend to have higher inflation aversion, (2) the elderly display some opposition to quantitative easing (QE), and (3) despite such policy preferences, the concentration of elderly in electoral districts has no significant effect on the preferences either of legislative incumbents or candidates. The third finding is attributable to the fact that elderly opposition to quantitative easing is moderated by their partisan identification. Elderly Liberal Democratic Party voters have systematically lower opposition to quantitative easing, likely reflecting that these voters have aligned their preferences with the LDP’s policies.

Between January 2018 and February 2025, the United Kingdom's consumer price inflation rate showed notable volatility. The rate hit its lowest point at 0.5 percent in August 2020 and peaked at 9.6 percent in October 2022. By September 2024, inflation had moderated to 2.6 percent, but the following months saw inflation increase again. The Bank of England's interest rate policy closely tracked these inflationary trends. Rates remained low at 0.5-0.75 percent until April 2020, when they were reduced to 0.1 percent in response to economic challenges. A series of rate increases followed, reaching a peak of 5.25 percent from August 2023 to July 2024. The central bank then initiated rate cuts in August and November 2024, lowering the rate to 4.75 percent, signaling a potential shift in monetary policy. In February 2025, the Bank of England implemented another rate cut, setting the bank rate at 4.5 percent. Global context of inflation and interest rates The UK's experience reflects a broader international trend of rising inflation and subsequent central bank responses. From January 2022 to July 2024, advanced and emerging economies alike increased their policy rates to counter inflationary pressures. However, a shift began in late 2024, with many countries, including the UK, starting to lower rates. This change suggests a potential new phase in the global economic cycle and monetary policy approach. Comparison with other major economies The UK's monetary policy decisions align closely with those of other major economies. The United States, for instance, saw its federal funds rate peak at 5.33 percent in August 2023, mirroring the UK's rate trajectory. Similarly, central bank rates in the EU all increased drastically between 2022 and 2024. These synchronized movements reflect the global nature of inflationary pressures and the coordinated efforts of central banks to maintain economic stability. As with the UK, both the U.S. and EU began considering rate cuts in late 2024, signaling a potential shift in the global economic landscape.

India CPI Inflation Projection: Quarterly: 6th Monetary Policy Statement data was reported at 4.200 % in Mar 2026. This records an increase from the previous number of 3.800 % for Dec 2025. India CPI Inflation Projection: Quarterly: 6th Monetary Policy Statement data is updated quarterly, averaging 4.700 % from Jun 2017 (Median) to Mar 2026, with 35 observations. The data reached an all-time high of 6.500 % in Mar 2020 and a record low of 2.800 % in Mar 2019. India CPI Inflation Projection: Quarterly: 6th Monetary Policy Statement data remains active status in CEIC and is reported by Reserve Bank of India. The data is categorized under India Premium Database’s Inflation – Table IN.IA002: RBI Monetary Policy Statement: Inflation Projection.

Replication Package for Two Illustrations of the Quantity Theory of Money Reloaded Authors: Han Gao, Mariano Kulish, and Juan Pablo Nicolini

This paper derives optimal monetary policy rules in setups where certainty equivalence does not hold because either central bank preferences are not quadratic, and/or the aggregate supply relation is nonlinear. Analytical results show that these features lead to sign and size asymmetries, and nonlinearities in the policy rule. Reduced-form estimates indicate that US monetary policy can be characterized by a nonlinear policy rule after 1983, but not before 1979. This finding is consistent with the view that the Fed's inflation preferences during the Volcker-Greenspan regime differ considerably from the ones during the Burns-Miller regime. The file MONTHLY.TXT contains monthly data between 1970.1 and 2000.12 arranged in five columns; the file QUARTERLY.TXT contains quarterly data between 1960.1 and 2000.4 arranged in five columns. The headings OBS, FFRATE, INF, IPI, and UNRATE denote, respectively, the date, Federal Funds rate, CPI inflation rate, Index of Industrial Production, and Unemployment Rate. Additional details can be found the section entitled 3.1 DATA of the paper.

We propose a novel econometric approach to estimating time-varying policy effects using external instruments in the presence of time-varying instrument relevance in a factor-augmented VAR model with data on the U.S., Canada, Germany, Japan, and the U.K. We find that U.S. monetary policy shocks are an important driver of the exchange rate movements, with no delayed overshooting. We show that estimates of spillover effects of U.S. monetary policy shocks on the inflation and real economic activity would be distorted without considering time variation in instrument relevance, and time variation in policy effects reflects primarily varying shock size, not their transmission.

India CPI Inflation Projection: Annual: 6th Monetary Policy Statement data was reported at 4.200 % in 2026. This records a decrease from the previous number of 4.500 % for 2025. India CPI Inflation Projection: Annual: 6th Monetary Policy Statement data is updated yearly, averaging 4.950 % from Mar 2023 (Median) to 2026, with 4 observations. The data reached an all-time high of 6.500 % in 2023 and a record low of 4.200 % in 2026. India CPI Inflation Projection: Annual: 6th Monetary Policy Statement data remains active status in CEIC and is reported by Reserve Bank of India. The data is categorized under India Premium Database’s Inflation – Table IN.IA002: RBI Monetary Policy Statement: Inflation Projection.