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They are saying they will raise it several more times this year. Inflation isn't the worst economic problem you can have, unemployment and deflation are. And r
by afterburner 5y ago
They are saying they will raise it several more times this year.
Inflation isn't the worst economic problem you can have, unemployment and deflation are. And raising interest rates risks raising unemployment, and even causing a recession if you're too aggressive.
The inflation could still be a temporary effect of the COVID years, so if you overdo it, you'll risk dampening economic activity too much when it was going to go down after a year anyways.
- cm2187 5y agoeven if you add the subsequent increases, they add up to 1.5%. That won't do anything to an inflation of 8% raging right now.
- afterburner 5y agoIf the inflation falls later on, that 1.5 won't look so bad. No reason risk to crash the economy right when it's just starting to recover. Overcorrecting is bad.
- cm2187 5y agoIt has been high for a year already and everything points to it worsening (the 8% doesn't include Ukraine, which will push both energy and food prices up). It is because it is not temporary anymore than the Fed is forced to act now.
- afterburner 5y agoIf you're right, the Fed can always raise it more later. No need to overcorrect. Some moderate inflation is far from the worst thing that can happen.