Jerome Powell Says Inflation Isn’t Coming Down
(TargetLiberty.org) – Inflation began to rise in the fall of 2020, as a result of the COVID-19 pandemic. The economic issue has grown significantly worse and touched nearly everyone in the US (and also other nations). People are paying more money for goods and services, including food, medical care, and loans.
The Federal Reserve helped create the problem by lowering its benchmark interest rate to zero during the first year of the pandemic, then keeping it really low. This year, the national bank began raising the rate in an effort to cool the economy and bring inflation down. The chairman of the Federal Reserve has now warned that inflation might be around for a while.
Powell’s Bad News
On Wednesday, November 2, the Fed raised the benchmark rate three-quarters of a percentage point for the fourth consecutive time and the sixth increase in 2022. The new target range of the lending rate is 3.75% to 4%.
Fed Chairman Jerome Powell admitted inflation is still a serious issue. He said it has remained over the goal of 2%. He pointed to the Russian war on Ukraine as a contributing factor. The chairman also said there’s no indication inflation is lowering yet and made it clear he will have to increase the rate again.
The benchmark rate could rise over 4.5% to 4.75%, and those increases could happen after the next meeting of the Federal Open Market Committee. The chairman also discussed the possibility of a recession. He said that although he thinks a soft landing (controlling inflation without a recession) is still possible, it’s becoming more unlikely as the economic situation tightens.
What Does It Mean for the American People?
When the Fed raises its benchmark interest rate, the banks turn around and lend money at a higher rate. That means people who might have paid 3% on a car loan last year could be paying 6% this year. The same goes for mortgages. The interest rate to purchase a home is now more than 7%. Credit cards will also become more expensive for those who carry a balance.
If the country is thrown into a recession, many Americans could lose their jobs which, in turn, could lead to a rise in foreclosures. Losing an income at a time when the cost of goods and services is so high will also have an incredibly damaging impact on families.
The announcement about the interest rate came less than a week before people head to the polls, where they will decide if the inflation crisis warrants new leadership in Washington, DC.
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