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For: Real America News Updated 18 Jan 2022, 10: 48 am EST
Since last year the inflationary phenomenon that the United States is experiencing has not subsided, despite the authorities in charge of economic policy have said that in the coming months the increases in products will decrease, there are who assure that this situation will come to an end in 2023.
Kenneth Rogoff, a professor at Harvard University, announced to the FOX network that inflation is not transitory as is thought , which is why it will be kept until next year.
“It’s not so easy to raise interest rates to fight inflation when public and private data is high, when the stock market is high, when house prices are high, when the economy is still weak,” he said. the former chief economist of the International Monetary Fund.
In addition, the expert indicated that he believes that the Federal Reserve s will be “cautious” and certainly “will not go too far in raising interest rates for now
”, and explained that this is why he believes that “we will still have inflation in 2023”.
Inflation rose at the fastest pace in nearly four decades last December, as rapid price rises fueled consumer fears on the state of the economy.
The price index Consumer spending rose 7% in December from a year earlier, according to a new Labor Department report, marking the fastest increase since June of 1982, when inflation reached 7.1%.
Given rising inflation, pressure will increase on the Federal Reserve to start raising interest rates to combat the recent price increase. Rising interest rates tend to create higher rates on business and consumer loans, slowing down the economy by forcing them to cut spending.
Jerome Powell, head of the Fed, has pointed to the central bank’s plans to accelerate its withdrawal of support for the country’s economy to fight inflation, which has been higher and longer lasting than formulators initially expected. of economic policies.
Regarding the actions that the government is taking, Rogoff said that he believes that the Fed is taking its 2% inflation target “seriously” and added that the central bank it also takes a recession “seriously.” The economist added that he believes the Fed will be conservative in its rate hikes as the central bank has indicated.
According to the Department of Labor, rising inflation is killing off earnings, wages and salaries that workers have earned in recent months.
Real average hourly earnings increased by only 0.1% in December, as the 0.5% rise in inflation eroded the 0.6% total wage increase. On an annual basis, actual earnings actually decreased 2.4%.
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