Inflation is off the charts right now, and the only way to bring it down is to reduce public spending. For this, we have wanted high-interest rate hikes for quite some time. And now, even the Feds governor wants a 50bps rate hike in every meeting until inflation comes under control. A 50 basis point hike is a 0.5% increase in interest rate. The last interest rate hike was 0.25%.
Feds governor wants 50bps rate hike
The savings of Americans have come down to a level that was not seen since the 2008 recession. This shows the kind of impact Inflation is having on the pockets of the common citizens. The price of everyday necessities is on the rise, and the inflation rate of consumer items is much more than 8%. The current Russia-Ukraine war situation also has a role to play in this.
Joe Biden will host a meeting today with Fed Chairman Jerome Powell to discuss the effects of inflation on the US economy. And the governor of the Federal Reserve, Christopher Waller, thinks that a 50 bps rate hike is necessary at every meeting to stop inflation.
Christopher further explained his views on the need for fast and higher rate hikes. He said that the labor market would be able to cope with these hikes without the increase in unemployment. Waller also said that he is prepared to do more if data suggests that inflation is even higher.
Fed governor targets a 2% inflation rate
Christopher repeatedly said that they should continue the 50 bps interest rate hike until the inflation rates come down. Well, he is optimistic that we could come back to 2%, which is the benchmark for the Federal Reserve. So, unless the US nears that, the 50 bps must continue, says Waller. With interest rates increasing, the demand will get closer to the supply, which will bring down inflation.
If the Feds are able to bring inflation down to 2%, it will be really great for the US economy and the entire world. However, it’s easier said than done, and more importantly, we have to see if the 50 bps rate hike even happens.
What are your thoughts as the Feds governor wants a 50bps rate hike? And do you think that this suggestion will be implemented? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: China plans to airdrop digital Yuan to improve its economy.
