5 ms·
The Fed has stated that it's within their mandate to let inflation run higher since it's been so low the past decade, to have a long term 2%. Their thinking was
by throwaway_4ever 4y ago
The Fed has stated that it's within their mandate to let inflation run higher since it's been so low the past decade, to have a long term 2%. Their thinking was, while unemployment isn't down to pre-covid levels (it wasn't until March 2022, the date of their first hike), the last decade is actually -4% under a long term 2% average. 2021 coming in at 6% inflation would be a 2% inflation average the past decade, but it still only came in at 4.7%. Inflation at 3.3% this year would still be exactly a 2% average, and we're currently overshooting that, thus the frantic 75 bps hikes. But with July's numbers already looking greatly down, the rest of the year could still prove like a 2.2% yearly inflation over the past decade.
Feel free to look at how low inflation has been: https://www.usinflationcalculator.com/inflation/current-inflation-rates/ https://www.usinflationcalculator.com/inflation/current-infl...
- slaw 4y ago75 bps hikes are not frantic. Hikes should be 300 bps to be barely enough.
- throwaway_4ever 4y ago75 bps hikes are unprecedented in the last 40 years, since Volcker, and they are happening every month right now. By historical measures, I'd consider it frantic compared to most of history being long periods of unchanging rates. Look at the gradient of the recent hikes: https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
- slaw 4y agoKeeping interest rates 7% points below inflation is unprecedented in all history, by historical measures, I'd consider hikes are 2 years too late and tiny.
- spaceman_2020 4y ago1.5% federal rate when inflation is 9% isn't going to have any impact at all. Read some of the comments on YouTube or Facebook where the bottom 50%ile congregate. People are hurting bad, especially because of the rent increases. Now that they've been so slow to act, inflation has a good chance of becoming endemic. Its steeped into services now which tends to be very sticky.