Financial Times/Martin Arnold, Colby Smith and Chris Giles/6-30-2022
“They said failing to raise interest rates quickly enough could allow high inflation to become embedded and ultimately require more drastic action by central banks to bring price growth back to more moderate levels. ‘The process is highly likely to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,’ said Powell.”
USAGOLD note: As more than one prominent analyst has said in the recent week, it is going to take more than just talking down inflation to truly bring it under control. The Fed funds rate is now at 1.75%. The Fed says it will push it to 3.5% by the end of the year – doubling interest rate costs in an already wobbly credit market. Even so, at 3.5% the Funds rate will be far below the headline inflation rate. The scope of the problem is evident in the chart. At any rate, if you want a summation of what happened at the Sintra conference, the article linked above will provide it.
Fed funds rate and headline inflation
Chart courtesy of TradingView.com
