Wonkbook: Janet Yellen's battle between fantasy and fact

By Matt O'Brien The Federal Reserve keeps looking for reasons to raise interest rates, and it keeps not finding them. Inflation, after all, is still far below its 2 percent target, inflation expectations are also low, and, in some cases, falling further, and the labor market has lost as much momentum the last 5 months as …   The latest economic and domestic policy from Wonkblog   (Nicholas Kamm/AFP/Getty Images) By Matt O'Brien The Federal Reserve keeps looking for reasons to raise interest rates, and it keeps not finding them. Inflation, after all, is still far below its 2 percent target, inflation expectations are also low, and, in some cases, falling further, and the labor market has lost as much momentum the last 5 months as it has before the Fed has cut rates in the past. It was no surprise, then, that the Fed decided not to increase interest rates, but rather kept them at the same 0.25 to 0.5 percentage points they've been since the start of the year. No, the only real surprise was that it thought it might do so as recently as a month ago. Or least it should have been. It wasn't, though, because of what Larry Summers calls the Fed's Groundhog Day problem. Every month, the Fed talks up the chances that it could raise rates. And every month, with the exception of last December, it doesn't. The economy just isn't ready for them. Why doesn't the Fed see that? Because it doesn't want to. Read the rest on Wonkblog.   Chart of the day Data from the Federal Bureau of Investigation suggests that the number of active-shooter incidents is increasing. Christopher Ingraham has more. Top policy tweets "The Fed's forecasts for the interest-rate target keep getting lower. And lower. Also, lower. https://t.co/pOvngt6eft" -- @andrewvandam "This is not Dems' sales pitch but I'm totally down with letting the prez unilaterally ban people (hopefully everyone!) from buying guns" -- @dylanmatt "CDC: 6 Zika-infected U.S. babies have had birth defects https://t.co/q49uajXCJJ" -- @bylenasun ADVERTISEMENT   Most Recent Posts from Wonkblog The Federal Reserve is finally facing reality The Federal Reserve keeps looking for reasons to raise interest rates, and it keeps not finding them. By Matt O'Brien  •  Read more »   FBI: Active shooter incidents have soared since 2000 Active-shooter incidents are becoming more common, and civilians aren't stopping them. By Christopher Ingraham  •  Read more »   Why you’ll be glad you took that photo Taking photos really doesn't ruin the moment By Ana Swanson  •  Read more »   How inequality made the recession worse New research shows the least-wealthy Americans pulled back their spending after the Great Recession. By Jim Tankersley  •  Read more »   The unexpected way an assault weapons ban could reduce mass shooting casualties Ban the gun or ban the ammunition clip? By Christopher Ingraham  •  Read more »   It turns out the most hyped solution for police brutality doesn’t work Everyone thought it was the key to fixing police violence. It may actually increase violence. By Keith Humphreys  •  Read more »   Why this start-up wants to put vegetables you've never heard of on your dinner table Meal-kit service Blue Apron is gambling it can crack the online grocery business by returning to the farm. By Sarah Halzack  •  Read more »   Federal Reserve leaves key interest rate unchanged amid job market slowdown, Brexit fears The central bank lowered its forecast for growth but bumped up inflation estimates. By Ylan Q. Mui  •  Read more »   ADVERTISEMENT   Recommended for you   Federal Insider Federal news and policy update, in your inbox daily. Sign Up »         Share Wonkbook:       Twitter      Facebook Trouble reading? Click here to view in your browser. You received this email because you signed up for a Wonkblog newsletter. For additional free newsletters or to manage your newsletters, click here. We respect your privacy. If you believe that this email has been sent to you in error or you no longer wish to receive email from The Washington Post, click here. Contact us for help. ©2016 The Washington Post, 1301 K St NW, Washington DC 20071