- The Fed has announced the lowered hike rates in December 2022.
- Jeremy Powell says the strategy is vital in tackling inflation.
- The Nigerian food price index shows over 24% inflation in the country.
Fed Lowers The Latest Rate Hike
The Federal Reserve chose to provide relief in the rate hike, increasing it by 50 basis points instead of 75 in December 2022. This was the Fed’s 7th rate hike in order to keep the nation’s inflation in check. According to a statement by the Federal Open Market Committee (FOMC), “Inflation stays elevated, showing supply and demand imbalances associated with the pandemic, energy costs, and wider price pressures.”
According to CNBC, this is the highest fed fund rate since December 2007. Jerome Powell, Fed chair, stated that it is vital to stay in this fight against inflation so the anticipation regarding higher prices doesn’t become entrenched. He added that the current inflation data for October and November shows a decline in monthly pace of price increase.”
Federal Reserve officials think that increasing the rates will aid in taking the funds out of the economy, elevating the demand and eventually bringing the prices down after the inflation rose to the peak in over forty years. FOMC has reduced their target for the next year, keeping the anticipated GDP gains at 0.5%.
According to the Labor Department, CPI increased by merely 0.1% last month. It was a lower than expected increase following the 12 month rate drop to 7.1% or 6% if we exclude food and energy. Both the metrics remain lowest since December 2021. The consumption expenditures price index declined to 5% annual rate during October 2022.
While the people focus on the major countries, there are others that are going through high inflation. According to a Reuters report, the inflation increased for the 10th consecutive month in Nigeria. It rose from 21.09% in October 2022 to 21.47 the next month. The National Bureau of Statistics (NBS) believes the upsurge is due to the food supply disruptions.
Another food price index reveals 24.13% inflation in November 2022 in contrast to 23.72% in October 2022. Nigeria remains the most populous African nation to suffer the increasing prices for staples such as bread and rice. The authorities anticipate the inflation to stay in double digits on an average of 17.16% in 2023.
The Guardian reported that thirty million people in the United Kingdom will not be able to afford a ‘decent standard of living’ by 2024. The New Economics Foundation stated that the increasing prices, below-inflation rise in earnings and anticipated increase in unemployment may lead to 43% households being deprived of basic resources required to put food on the table.
Source: https://www.thecoinrepublic.com/2022/12/15/federal-reserve-provides-relief-in-december-rate-hike/