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Posted on 11/01/2021 7:57:56 AM PDT by Oldeconomybuyer
With inflation at its highest point in three decades, the Federal Reserve is set this week to begin winding down the extraordinary stimulus it has given the economy since the pandemic recession struck early last year, a process that could prove to be a risky balancing act.
Chair Jerome Powell has signaled that the Fed will announce after its policy meeting Wednesday that it will start paring its $120 billion in monthly bond purchases as soon as this month. Those purchases are intended to keep long-term loan rates low to encourage borrowing and spending.
Once the Fed has ended its bond purchases by mid-2022, it will then turn to a more difficult decision: When to raise its benchmark short-term rate from zero, where it’s been since COVID-19 hammered the economy in March 2020. Raising that rate, which affects many consumer and business loans, would be intended to make sure inflation doesn’t get out of control. But it would carry the risk of discouraging spending and undercutting the job market and the economy before they’ve regained full health.
“We don’t have a roadmap for what we’re going through,” said Diane Swonk, chief economist at Grant Thornton. Powell has to “walk a tightrope” by supporting the recovery while not “turning a deaf ear to inflation.”
(Excerpt) Read more at apnews.com ...
Just in time to pile on to the Biden misery index. lol
After a decade of artificially keeping interest rates low and pumping trillions into the system and artificially pumping up markets…
There is zero chance we will not experience significant inflation.
Zero.
Oh? There’s a risk of inflation? Who would have guessed that?
The Fed is busy spinning plates in the air...nothing could possibly go wrong....
wrong....
wrong....
wrong....
I think there is a definite risk to stagflation. Interest rates will be rising and there will be little to no real growth, just more dollars chasing the same or less goods.
If Volkner were at the FED these days, the interest rates would be in double digits.
Naw. The inflation is just transitory. 😜
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+1
Its certainly miserable for the average person, but not for the elites. The elites have plenty of ways to stay ahead of inflation.
While Biden wants to give ‘separated families at the border’ $450,000 EACH.
the debt that ate the fed budget
gov interest cost will go up as well
None of this would be happening if the Fed and politicians had just let the natural cycle of rise and fall of the economy occur. But no. These foolish clowns decided they could artificially end the natural cycle of the economy. Fools. Cyclic downturns cannot be avoided. Only postponed. People suffer while bankers and politicians hide with their loot.
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