At this moment in time, the United States citizens have faced an increased in prices across the country do from the increase of inflation in recent months. The Federal Reserve chairman, Jerome Powell, put out a warning saying that interests rates may have to increase as well to begin a shift on the current inflation rate. The FED has been moderating and trying to work to get the inflation back but Powell told the senators "Inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go. Over the last year, the central bank has raised the interest rates eight times. to try and lower the inflation rate. This past January, business began to higher more and consumer spending increased as inflation was beginning to work its way down. After Powell made his comments, markets are concerned as rates were only supposed to increase by .25% but are now being estimated to be in the 5% range.
Do you think by raising the interests rates to 5% will help balance inflation in the US economy?
I think this kind of fits into our original predictions. At the economic outlook conference hosted by OWU last semester, the professionals in the panel felt it would take us years to get back to a figure of 2%. I think that makes it less surprising here and shows us that rising interest rates could be around for a while longer and that this road is going to be a whole lot bumpier than it will be smooth.
ReplyDeleteUntil the economy slows down, yes. While the job boom has certainly given the Biden Administration more credibility, the Fed's decision to hike interest rates even more could hurt it. However, it is a necessary step to reduce prices and raise consumer confidence.
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