Jerome Powell was reappointed as Federal Reserve Chair by President Biden, but it is being accompanied by major changes. The focus on employment and recovery has shifted to inflation. The Fed has been slow moving in its reaction to higher inflation. Last fall, it reduced proposed quantitative easing by June, now the end date is March with three rate hikes tossed in during 2022 (some speculate 6 quarter-point increases).
The inflation that was called transitory is now identified as much more sustaining and likely to stay above (likely well above) 2 percent throughout the year. The political impact of inflation may be even greater than that of unemployment. People see it at the gas pump ($5.00 a gallon) and the grocery stores ($15 per lb. bacon). Plus, it’s hard to be concerned about unemployment when jobs are going unfilled and wages are rising rapidly.
The Fed was late, but now the challenge is to brake, but not cause a crash.
1 comment:
$5/gal gasoline!
Where in Colorado (other than downtown Aspen)?
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