Inflation has become one of the largest issues of the past year, with hundreds of millions of Americans dealing with the increase in prices in everything across the board. In reaction to this, little has been done. In fact, every time things are getting better, another variable comes into play, pushing inflation rates even higher. Jerome Powell, Chairman of the Federal Reserve, and the Federal reserve at large, has been making plans to tackle this inflation. Most recently of which was raising interest rates by three-quarters of a percent.
More recently, Federal Reserve Chair Jerome Powell vowed that the Feds would not allow inflation to take hold of the U.S. economy over the long term. More specifically, he said: “The risk is that because of the multiplicity of shocks, you start to transition to a higher inflation regime. Our job is to prevent that from happening, and we will prevent that from happening.” And that: “We will not allow a transition from a low-inflation environment into a high-inflation environment.”
Looking at the economy, inflation in the U.S. is currently running at its highest level in more than 40 years. In the near term, the Fed has executed multiple rate hikes in effort to subdue the rapid price increases. Powell said that it’s also important to arrest inflation expectations over the longer term, so they don’t become entrenched and create a self-fulfilling cycle.
What do you think about the current rates of inflation and will the Fed be able to use economic tooling to subdue it?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.