Despite the Federal Reserve's unyielding attempts to slow inflation down by increasing interest rates, inflation still remains unusually high. Inflation was +6.4% in January, which is a decrease of .1% from December but inflation is still around 3 times as high as what it was before the pandemic hit. The issue is as simple as this: the economy won't cool off. The job markets are still booming with extremely low unemployment rates and the economy just keeps growing. The purpose of the Fed increasing the interest rates is to cool off the economy, slowing it down so that inflation will settle. Prices continue to rise at a rate we haven't seen since the 90's and inflation is to blame. We can only anticipate that the Fed will continue their harsh attempts to raise interest rates in order to get a hold on inflation in the near future.
Source: https://www.nytimes.com/2023/02/14/business/economy/january-cpi-inflation-report.html
3 comments:
Overall, great post! I think that this is important to take note of because despite the economy seeming to have a cheerier perspective than what it has had in the past, we are still facing some harsh realities given prices continuously going up and inflation still rising with no end in sight. I wonder if the FED will have to eventually take another approach instead.
Hello Kory,
Inflation has definitely been the talk of the town in the last year and a half or so but I believe we will see decreasing numbers in the near future. As we know, Jerome Powell's target inflation is 2%, which is a number we are very far away from. But the question is how far? As you mentioned inflation was 6.4% in January but has seen a decrease since the last reported rates. My hopes are the economy will cool off within the next year or two and we will see the effects of policies such as the increase in interest rates.
Overall, great post. I do believe the economy is looking towards a bright future.
It is concerning to see high inflationary numbers despite the FED's efforts. I wonder if they will adjust their approach at the next FED meeting. I expect the to continue with their interest rate hikes going forward in 2023. Hopefully, they will still be able to achieve a "soft landing".
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