A measure of the Consumer Price Index at the end of January showed that prices had climbed 7.5% from the year before, the fastest rate of inflation the country has seen since 1982. This is higher than the predicted 7.2% predicted originally.
This is very unfortunate news for everyone, as prices continue to rise incessantly for American consumers. However, after receiving these numbers, it is clear that Fed's announcement of upcoming interest rate increases this year will be nothing short of necessary in order to slow this insane amount of inflation.
This rapid inflation also took a toll on stock prices, and caused bond yields to rise.
It will be a very suspenseful wait for the Fed's meeting in March when they will decide the increase schedule for interest rates and just how much the increase will be. Politicians and consumers alike will be eager and desperate in the coming month to hear what Fed's Monetary solution will be to combat these unbelievably high rates of inflation.
https://www.nytimes.com/live/2022/02/10/business/inflation-stocks-economy-news
This is a huge number. I hope many people who invested money this year, earned around a 7% return rate. I am interested whether the Fed expected this number or not. Facing a 7% inflation rate is terrible for any economy. Many countries depend on the US. It means that dependent countries faced a higher rate of inflation than the US. Inflation in Argentina soared to 50.9% in 2021.
ReplyDeleteWhile I hope the FED tries to lower inflation. I hope they do it in a controlled so they don't accidentally end up hurting economic growth, and consumers.
ReplyDeleteI agree that the FED has to do something to try and curb this rapid rate of inflation, but I think that if they go to too extreme of measures to do so, it may hurt the economy more than help it. If they raise the interest rate too high too quickly, unemployment will most likely also increase, which could make our economy even more unstable, so while I do think the FED has to do something, I think smaller increases in the interest rate may be the better way to go.
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