There are some signs that inflation is slowing, but the Fed still isn't going to stop raising rates anytime soon.
👉 Background: The Federal Reserve is America’s version of the RBA - they set the interest rates and try to keep the economy healthy.
👉 What happened: Late last week, the head of the Fed was set to give a big speech late, and much like Ross from Friends, a lot of people were yelling for him to PIVOT. They were hoping that the Fed might change its rate-rising-strategy since there are some signs that inflation is slowing.
👉 What else: Instead, the Fed flagged rate rises into next year - which is probably why all the major indexes were down at least 4% for the week after the news.
💡The Federal Reserve is trying to bring the economy to what’s called a 'soft landing'… and it ain’t an easy task. Think of it as a bit of a Goldilocks moment. If you increase interest rates too fast, you might cause a massive recession...
💡And if you don’t increase rates fast enough. Inflation might come running back.
💡It seems like the current chairman Jerome Powell wants to learn from the mistakes of the past… And even though US inflation has already dropped from 9.1% to 8.5%, he’s willing to accept weaker growth for the sake of getting inflation under control.
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