By Camerron Martin
Yearly inflation is always on a constant and unchallenged rise in the United States. With prices steadily rising and people feeling left alone without a way to make ends meet, many wonder what our government is doing to stop the increase. Federal Reserve Chairman Jerome Powell has answered many Americans’ questions with a caution that interest rates could soon increase to fight inflation.
On Tuesday, March 7, Powell stood and explained that what policymakers for central banks had expected for interest rates was much lower than what many people initially were told. Powell stated that inflation has begun to increase again rather than decrease, which it had in the later months of 2022.
Currently, the inflation rate in the United States is at 6.4%, according to the United States Labor Department, after rising to over 6% in 2022. However, on March 14, the next update to the inflation rate is set to be announced at 8:40 a.m. ET, which will likely offer further input to Powell’s plan. To get a better curb on inflation, Powell stated that interest rates need a high increase, but he had not said how high they would rise.
Powell commented that these higher rates could meet inflation on the high ground and push it back down to give everyone more breathing room regarding their expenses and smooth everything out in the long run without putting the economy into a recession. Powell stated in his speech that the Federal Reserve’s job of fighting inflation is far from over.
Many people would undoubtedly have almost no problem with a significant decrease in inflation as it would allow them to live a little easier. Still, there were arguments against the plans in Powell’s speech, mostly from Democrats on the Senate panel. Powell said that from the Jan. report on the rise of inflation that it was primarily caused by personal consumption, but many pushed back to start that corporate greed was the leading cause and that if Powell were to begin hiking interest rates, it would lead to more problems such as putting millions of American workers out of jobs.
Various representatives still have conflicting information and opinions about everything the chairman discussed. Some say that current interest rates have already done the work in lowering inflation. In contrast, others say that interest rates must be raised before inflation increases. Despite this, Powell is pushing that the strict policies that are in place stay on course as they are to avoid the issues getting too far out of hand.
For many, there is worry about an increase in interest rates. The higher interest rates get, the more expensive it is to borrow money, meaning that all types of loans will see a rise in payments as they follow the rising rates, which, when paired with the daily costs of food, housing, and other necessities could seriously negatively affect some before prices begin to come back down again. Other concerns include that if the Federal Reserve does try to hike interest rates, it will lead to the nation’s economy, and America will enter another economic recession.
The future of these plans is still very much up in the air as Powell stated decisions would be made meeting by meeting over the next few months based on data readings leaving many weary about what the Federal Reserve might put into place next.
