Inflation Alarm Bells Are Ringing, So Why Didn’t The Fed Raise Rates This Month?

Inflation Alarm Bells Are Ringing, So Why Didn’t The Fed Raise Rates This Month?

Share to Linkedin Amid a heated debate in Washington over whether easy monetary policy and unprecedented fiscal stimulus spending is actually hampering the economic recovery, the Federal Reserve on Wednesday signaled that it is looking ahead to two interest rate hikes by the end of 2023“”sooner than previously expected“”as signs of inflation continue to rattle markets. Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open ... [+] Market Committee meeting on January 29, 2020 in Washington, DC. For now, however, the central bank will leave rates untouched in the range of 0% to 0. 25%. Prices for consumer goods rose 5% in May“”the highest jump in 13 years“”and producer prices soared a record 6. 6% during the same month. Last August, the Fed announced it would aim for inflation that averages 2% over time rather than adjust policy to prevent inflation from rising above that threshold“”that means it's much more prepared than it used to be to tolerate higher prices. Officials within the Fed and the Biden administration have repeatedly argued that price spikes are to be expected as the economy reopens, that those spikes will fade over time as conditions normalize and that