Background: We know that inflation has been flying in the US. It hit 7.9% for the last quarter, which means a supermarket basket that was $100 in Feb last year... would now be worth $107.90. This is the highest inflation growth in 40 years. Eeep.

What happened: What causes this? Well, it's a combo of all-time-low interest rates, a huge pump of stimulus cheques and a major supply squeeze.

What else: So now, the US' equivalent of the RBA has had to step in and bump interest rates up by 0.25%. And they reckon there are six more rate hikes on the cards. So... the economy's about to take an ice, cold shower.

🔔 What's the key learning?

💡 It can be really difficult for central banks to hike interest rates, because often it can seem counterintuitive. Think about it: they're intentionally slowing down the economy... just when it seems to be doing so well!

💡 But hiking rates is actually a tactic that central banks employ to try and keep things steady. 'Cos ya know, there can be too much of a good thing.

💡A strong economy can sometimes get out of hand, and it can affect people's day-to-day lives. The cost of petrol, groceries... it can all skyrocket. So the Fed Reserve needs to hurt the economy in the short-term... to help it in the long-term.

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