https://www.cnbc.com/2023/02/24/the-fed-cant-tame-inflation-without-more-hikes-paper-says.html
The fed is not able to lower the inflation rate without raising the interest rates. While everyone thinks that inflation rates will begin to go down, the fed is not able to lower the inflation without the raising. Since the inflation rate has not been this high in over 41 years, the fed has been implementing high interest rate bursts to help what the inflation. As opposed to the past where the government would watch and see how the inflation affects everything, the fed said they are trying to jump on it quick and avoid long term issues. I think this is the best idea as of now. Even though it is hard times as of now, it is better to get over the hard times now and try to get it back down to a reasonable interest rate.
I wonder how long the Fed will have to keep hiking interest rates. We've seen that consumers are still spending a lot even with the increases. The Fed wants to slow down economic activity but they also need to be careful not to push too far and put us into recession. I foresee the potential for long-term issues if things aren't under control soon.
ReplyDeleteIncreasing interest rates can be an effective weapon for battling inflation, but it's important to take into account how it might affect other aspects of the economy, such borrowing and lending.
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