Why the Fed can’t stop prices from going up anytime soon
The Federal Reserve has begun its most challenging inflation-fighting campaign in four decades. And a lot is at stake for consumers, companies and the U.S. economy.
On March 16, 2022, the Fed raised its target interest rate by a quarter point – to a range of 0.25% to 0.5% – the first of many increases the U.S. central bank is expected to make over the coming months. The aim is to tamp down inflation that has been running at a year-over-year pace of 7.9%, the fastest since February 1982.
The challenge for the Fed is to do this without sending the economy into recession. Some economists and observers are already raising the specter of stagflation, which means high inflation coupled with a stagnating economy.