According to the latest announcement, the Fed doesn’t expect high U.S. inflation to subside to pre-pandemic levels for several years. Higher prices of gas, groceries, new cars, and mortgage rates are here for a long time. The Federal Reserve Chair Jerome Powell delivered that message on Wednesday.
For the first time since 2007, the central bank predicted inflation would end the year above 3% — in fact, well above that level. The Fed estimated the rate of U.S. inflation, using its favorite PCE price index, would average a whopping 4.3% in 2022.
These are dramatic changes for the Feds.
There is little choice. Inflation is at a 40-year high of 7.9% based on the consumer price index.
Faced with the first serious threat of high inflation since the early 1980s that resulted from Carter policies, the Feds on Wednesday raised a key short-term interest rate for the first time in four years. It also forecasts a higher-than-expected series of rate increases in 2023.
Are we heading for recession or worse?
OBAMA’S ECONOMIC ADVISER LARRY SUMMERS PREDICTS STAGFLATION
Many believe the Feds acted too late and are using tactics from the ’80s to combat a very different, deeply-in-debt USA.
Obama economic adviser Lawrence Summers sees the U.S. heading into a new era of stagflation. Stagflation is a disastrous combination of slow economic growth — stagnation — and high inflation.
In a Washington Post opinion piece this week, Summers said that the Fed is operating with dangerous policies and has been for years.
“I believe the Fed has not internalized the magnitude of its errors over the past year, is operating with an inappropriate and dangerous framework and needs to take far stronger action to support price stability than appears likely,” Summers wrote. “The Fed’s current policy trajectory is likely to lead to stagflation, with average unemployment and inflation both averaging over 5 percent over the next few years — and ultimately to a major recession.”
OUT OF CONTROL CONGRESS AND FEDERAL RESERVE
They’ve been printing money like master forgers. If you want to know how bad it can get, listen to Schiff’s latest rant. We could end up in an inflationary depression.
Hopefully, they’re wrong, but nothing is changing. Congress just passed a $1.5 trillion spending package filled with pork — nearly $800 billion in waste, payoffs, and welfare.
The Ukraine War is costing the US billions with no end in sight. We sent a billion dollars worth of equipment this week alone. At the same time, many Americans are struggling to fill up their gas tanks and heat their homes. Yet, we keep spending and are destroying our energy sector. The sanctions against Russia are hurting us much more than they are going to hurt Russia in the long run.
Pray for new and better leadership in November or a great awakening by the current one.
Jerome Powell, the Federal Reserve chair, announced that the central bank would raise interest rates for the first time since 2018 in an attempt to tame rapid inflation. The Fed also penciled in six more rate increases this year. https://t.co/IfA3hwzFPV pic.twitter.com/zBEjTuuovV
— The New York Times (@nytimes) March 17, 2022