Inflation 📍

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Live Updates – The New York Times

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Fed Raises Interest Rates and Projects Lingering Inflation: Live Updates – The New York Times

The Fed’s quarterly economic projections, released alongside the rate decision, showed that officials expected inflation to hover around 4.3 percent at the end of 2022. While that is less than 6.1 percent increase in the 12 months through January, it is well above the Fed’s goal of 2 percent.

Mr. Powell on Wednesday noted that inflation is “well above” the Fed’s target and that supply chain disruptions have been larger and longer lasting than expected. Higher energy prices are further elevating inflation just as price increases broaden beyond areas directly impacted by the pandemic, seeping into rent and other service prices.

“High inflation takes a toll on everyone, but really, especially, on people who use most of their income to buy essentials like food, housing, and transportation,” Mr. Powell said.

The Fed aims for both price stability and maximum employment, and central bank officials have indicated that the labor market is meeting that latter goal, though they hope more workers will return as fears of catching the coronavirus ease and as child-care issues tied to school shutdowns and other virus mitigation measures fade.

Why inflation is President Biden’s biggest political problem

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Why inflation is President Biden’s biggest political problem

In a recent CBS/YouGov survey, 58% of Americans said that Biden wasn’t focusing enough on the economy and even more—65%—said this about inflation. Only 33% say that Biden and the Democrats are focusing on issues they care about the most. According to a CNN poll, 7 in 10 Americans think the government isn’t doing enough to reduce inflation and relieve disruptions in the supply-chain. Against this backdrop, it’s not surprising that just 38% approve of the president’s handling of the economy and even fewer—30%— his handling of inflation

NPR

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Inflation is hits another 40-year high. Older folks have seen worse : NPR

Jeanette Vecchio is 30, and everywhere she goes, she's feeling the pinch of something she hasn't experienced before in her life: high inflation.

The latest reminder came when she went to her favorite corner restaurant in Chicago where she loves the bread and butter.

"They're now charging for bread and butter," she says. "I was so devastated by it. But it's just another example of an increase across the board."

From restaurant meals to apartment rents, consumer prices have been climbing at the fastest pace in 40 years, meaning younger adults are witnessing the highest inflation of their lifetimes.

The Labor Department said Thursday that January prices were 7.5% higher than a year ago — the largest increase since 1982. Higher costs for food, shelter, and electricity were among the biggest drivers of inflation last month.

NPR

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With inflation still hot, the Fed takes a step towards rate hikes : NPR

The Federal Reserve is paving the way for possible interest rate hikes next year, in an effort to contain stubbornly high inflation.

At the conclusion of a two-day policy meeting Wednesday, the central bank announced plans to phase out its large-scale bond-buying program faster than initially planned. The Fed started purchasing bonds during the pandemic as a way to keep borrowing costs across the economy low and to prevent any market disruptions.

Ending the bond purchases earlier would give the Fed more flexibility to raise interest rates sooner, if necessary, to keep prices from spiraling out of control. The central bank said previously it wanted to stop its bond purchases before considering raising interest rates.

The Fed is taking a harder line against inflation after consumer prices in November jumped 6.8% from a year ago — the largest increase in nearly four decades.

In a statement, the Fed acknowledged the rapid runup in prices. Although the central bank still believes inflation is largely driven by factors tied to the pandemic, which should ease when the health outlook improves, policymakers are no longer taking that as a given.