US President Joe Biden has said that inflation is the biggest economic challenge we face.
Biden added, “Inflation in America is out of our control, but we are trying to confront it.”
The CPI rose 8.5% for the year ending in March, a rate not seen since December 1981, so the central bank broke with the term “temporary” and turned its attention to a new term.
The Fed gave very little guidance in general about how long they expect the rate hikes to take to bring down inflation. “It’s a very difficult environment to try to give advance directive 60 or 90 days in advance,” Powell said. “There are a lot of things that can happen in the economy and around the world.”
There is nothing investors hate more than uncertainty, and as rising prices hit US markets, they want more guidance.
Americans, hard hit by rising gas and food prices, also want to know when they can finally feel some relief, especially if an increase in Fed interest rates risks dragging the economy into recession.
A few days ago, after announcing a half-point rate hike to combat inflation, Federal Reserve Chairman Jerome Powell said, “Our job is to make sure that inflation of this unpleasantly high nature does not take root in the economy. It is not clear what exactly persistent inflation looks like or how we will know if we have reached it.”