Home Business Rising Inflation Looks Less Severe Using Pre-Pandemic Comparisons

Rising Inflation Looks Less Severe Using Pre-Pandemic Comparisons

by Bioreports
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As consumers deal with starkly higher prices than a year ago, the Federal Reserve has maintained its stance that high inflation, the increase in the price consumers pay for goods and services, isn’t expected to last very long.

The Fed tweaked its outlook and now expects to raise interest rates by late 2023—sooner than previously anticipated—noting progress in economic activity and employment.

And while inflation’s 13-year high, as measured by the annual change in the consumer-price index from a year earlier, has caused concern, the central bank restated its belief that the rise in prices is “largely reflecting transitory factors.”

The Fed cuts its benchmark interest rate in economic downturns to lower borrowing costs and boost activity. When the economy is thriving, prices rise and the Fed tends to raise rates to keep inflation from climbing too far above its 2% target. Its preferred gauge, the personal-consumption expenditures price index, typically tracks just below the consumer-price index.

A sudden burst in consumer demand from the economy reopening and an imbalance in supply disruptions are among the main factors driving up prices compared with the same period last year.

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