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Home Global Economy It hasn’t been there for almost 40 years: 7 percent inflation in the USA
Global Economy

It hasn’t been there for almost 40 years: 7 percent inflation in the USA

Rapidly rising prices in the USA are apparently not a “temporary phenomenon”, as President Joe Biden put it: goods and services were 7 percent more expensive in December than in the previous year. This is the highest increase in almost 40 years – an exit from the loose monetary policy and a turnaround in interest rates by the central bank, the Fed, are in the air.

Bringing the “too high” inflation rate under control again is the key, according to a senior member of the

US Federal Reserve Board is currently the “most important task” of the central bank. Many people in the country are concerned about the dwindling purchasing power, said Lael Brainard, who was nominated by US President Joe Biden for the post of Vice Chair of the Federal Reserve (Fed) in November.

The Fed had supported the economy and markets because of the Corona crisis with massive aid programs since 2020. According to many analysts, the central bank could now raise its key interest rate again as early as March in view of the good development of the labor market and growth. The Fed can thus curb inflation, but at the same time the economy will also suffer from a tighter monetary policy. According to the US Federal Reserve’s December forecast, there could be up to three rate hikes in 2022. The key interest rate is currently still in the extremely low range of 0.0 to 0.25 percent.

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