As the new year starts winding up and we enter the post-holiday economic phase, good news greets us. Namely, the inflation that has been ravaging the US has slowed down by a considerable margin. Fed’s new interest rate hike announcement shows us the smallest increase in almost a year.
It has announced only a quarter-point increase, planning to increase rates from 4.5% to 4.75%. That’s the lowest increase since March 2022, leaving room for cautious optimism.
However, while the situation is evolving better than anticipated, the US isn’t out of the danger zone yet. Inflation, despite signs of easing, is still at a lofty level that endangers both everyday consumers and broader economic actors. The Fed has hedged its statement about the lower increase by adding that it will not hesitate to raise rates again. Of course, that’s only if the situation requires such a reaction.
As-is, there’s a lot of ground left to cover, according to Powell, the Fed chair. Inflation has been rampant, reaching 40-year highs and drastically impacting the consumer basket. Other necessities, such as housing, have also undergone a crisis of their own, with both renting and purchasing prices skyrocketing.
Gas prices have also been a major concern, increasing everyday spending and industrial costs alike. Newly, eggs have been a concern, as shortages cause the price of the everyday commodity to rise. However, the Fed seeks to ease the pressure on the economy, bringing prices down in the process.
The effort seems to be somewhat fruitful so far. Since the massive peak of 9.1% in June, prices have steadily been dropping every month. December’s result was 6.5%, which, while not great, beats the previous month’s 7.1%. Still, when we consider the Fed’s annual goal of 2%, inflation remains the number one problem to solve in the US.
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