Combating inflation


NBC News

Federal Reserve Chairman Jerome Powell will testify before Congress for the second day in a row as lawmakers expect to grill Powell on soaring inflation and interest rate hikes. His speech finds new ways to control inflation that will actually work. He highlights the active disinflation to give the country hope in the economy.

Lauren Lee, News editor

People wonder, when this surge of inflation will end and when they will receive answers. Jerome Powell mentioned that interest rates will likely head higher than most Americans might have expected. Data from earlier this year showed that inflation sky-rocketed and appears of tighter policy for slowing down a growing economy.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” Powell said. 

In a December estimate, the terminal rate stood at 5.1%. Current market pricing moved higher  to a range of 5.5%-5.75%, according to CME Group data. To further America’s uncertainties, Powell appears also uncertain about how high prices might reach.

Powell discusses in his speech, he remains optimistic that the central bank can tame inflation without ruining. Stocks fell  while Treasury yields jumped after Powell’s remarks released. Data also reveals that inflation still ran at a 5.4% pace annually. This stands well above the Fed’s 2% long-run target and. The Fed’s inflation-fighting job still continues to improve the economy.

“It feels like inflation gets worse and worse every day and nobody is taking action. Gas prices haven’t dropped to what they were a few years ago and I just wonder when it will end. I feel like what Powell is doing is more effective than other recent solutions,” junior Aaron Wilson said.

The chairman faced criticism  from democrats on the Senate panel and said the Fed should reconsider its rate increases. Senator Elizabeth Warren, charged the Fed’s inflation goals will put two million people out of work. The Fed has raised its benchmark fund rate eight times over the past year to its current targeted level between 4.5%-4.75%. The fund’s rate determines what banks charge each other for overnight lending. But other consumer debt products such as mortgages, auto loans and credit cards seem to arise.

Powell does say the country has made progress but there still remains inflation in other categories. This infers that the country might continue to inflate in certain areas without the correct protocols.