Federal Reserve Say There’s “No Good Answer” On Interest Rates

(PatrioticPost.com)- Despite rising concerns that its efforts to combat inflation may cause the United States to enter a recession, the Federal Reserve is still on pace to raise interest rates sharply on Wednesday.

According to government data, the Fed is anticipated to announce a further 0.75 percentage point interest rate increase on Wednesday as both price and employment growth has increased.

After waiting in vain for months for inflation to decrease, the Fed rapidly increased interest rates starting in March to lower prices. This year alone, the bank has already increased its base interest rate range by 1.5 percentage points, with a 0.75 percentage point increase in June.

According to Mark Zandi, chief economist of Moody’s Analytics, getting inflation down, preferably down without throwing the economy into recession, is job No. 1 for the Fed, but it isn’t a prerequisite.

“That’s incredibly difficult since a lot of the inflation is caused by factors outside their control,” Zandi said.

The Fed’s objective of bringing inflation down has been advanced by the U.S. economy showing symptoms of slowing down due to rising interest rates. Due to increasing mortgage rates, falling stock prices, and decreasing profit margins, firms are scaling down their expansion and hiring plans.

However, the continued pandemic-related supply chain problems and the conflict in Ukraine have kept food and energy prices high, forcing the Fed to raise interest rates even more.

According to Karen Shaw Petrou, managing partner at Federal Financial Analytics, the Fed has been under pressure to make difficult decisions due to the pressures that “have only gotten” worse since the bank hiked rates in June.
According to economist John Petrou, the Federal Reserve should have started raising interest rates much earlier. He says that consumer spending and rising inflation are slowing down the economy. The Fed has indicated that it will raise high rates to reduce inflation. According to economist Mark Zandi, the Fed needs to notice that future interest rate increases won’t be as swift.

Some analysts do not think the United States is now in a recession, but the likelihood of one is growing.

The Fed must continue raising interest rates to combat inflation.