But in recent months, the Fed has taken a more assertive stance. The Fed’s line for a while was that inflation would be transitory: Once some of the kinks in the economy, such as supply chain crunches, were worked out, it would begin to fade on its own. “It’s usually a bumpy ride.” What the Fed is trying to do The pieces are being put in place for a rebalancing of demand and supply, but it doesn’t happen overnight,” said Brian Bethune, a financial economist at Boston College. “Rates have already gone up, we already are in a transition phase where the economy is slowing down. Twice a month, Emily Stewart’s column exposes the ways we’re all being squeezed under capitalism. This marks the Fed’s third interest rate hike this year. The Fed was initially expected to raise rates by slightly less, but amid the May consumer price index coming in hot and consumer expectations for inflation rising, it acted more aggressively than anticipated. On Wednesday, the Federal Reserve raised interest rates by three-quarters of a percentage point, its biggest increase in 28 years. The Fed is trying to get you, for now, to stop buying so much stuff. To put it more plainly, the idea is to tamp down consumer spending and slow business expansion by increasing costs in other areas (namely, borrowing and loans). “If the Fed manages to cool demand, then there will be less price pressures, but cooling demand entails essentially making things more expensive.” “Getting inflation lower is usually painful because the Fed mainly has in its policy toolbox tools that make things even less affordable because the Fed’s policy toolbox is geared toward cooling demand,” said Gregory Daco, chief economist at EY-Parthenon. The bad news: The action it’s taking isn’t going to immediately make everything better, and in the shorter term, it could make things feel worse. The good news: The Federal Reserve is taking action to try to bring down inflation and get the economy back to whatever normal is. From inflation to the stock market, a lot about money feels pretty lousy. If you are a person living in the United States right now, you are probably at least medium worried about the economy.
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