The White House and Federal Reserve have launched several initiatives to try and control the rising prices, but higher costs appear to be everywhere, particularly in consumer staples that most families cannot do without. Gasoline, food, and a range of other products have become markedly more expensive, creating economic strains for households and businesses, and political problems for the government.
The economy is now expected to grow at a slower pace this year, in part because inflation causes families and businesses to rethink certain purchases and potentially decrease consumer spending. The inflation data, released Tuesday by the BLS, showed prices rose 1.2 percent in March compared with February. Price increases for gas, shelter and food were the largest contributors to inflation.
In order to try and arrest the growth of inflation, the Fed in mid-March launched its first rate hike since the pandemic began and penciled in six more for later this year. In the past few weeks, officials have signaled that even more aggressive hikes could come in the next few months.
https://www.washingtonpost.com/business/2022/04/12/inflation-march-cpi/
https://www.washingtonpost.com/business/2022/04/12/inflation-march-cpi/
I think that if the government wants to slow down inflation, they will need to enforce a very contractionary policy because this period of high inflation has been expected and building up since the beginning of the pandemic. I would not be surprised if we have high inflation for a long period of time and the inflation rate exceeds 10%
ReplyDeleteGreat post Haris! I think that the rate hike which the fed has launched is definitely the best way to attempt to slow the high rate of inflation. Unfortunately, Frankel is likely correct in his assumption of a long period of high inflation. Due to this it is almost certain that the Fed will end up launching even more aggressive hikes in the near future.
ReplyDeleteNow, everyone knows what inflation stands for. Since the begging of the year, inflation is everywhere, news, internet, etc. I hope, this is the highest number that we see. Many people struggle and there is not many solutions for it
ReplyDeleteThe disruption of the global supply chain has pushed inflation to quite high levels. Since the end of February, the conflict between Russia and Ukraine has threatened the global supply of fertilizers, food and energy, which has pushed up inflation to a greater extent.
ReplyDeleteI think that if the Fed wants to slow down our rapid inflation quickly then they will most likely have to resort to more aggressive interest rate hikes. But, if they increase the interest rate too fast, or too much, it could lead to a recession, which could cause even more problems in our economy.
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