Inflation will not fall to 2% target for two years, Fed's Mester says - page 3.

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Quote from: jackg on June 20, 2022, 07:32:50 AM

"a couple of years" might mean more than 2 too.

That was kind of a hedge-y statement, and I think I agree that she might not have meant exactly two years. Considering that inflation has only recently begun to spike, I was thinking that things might get a hell of a lot worse before they get better. What's inflation at in the US right now, 8% or something like that? That didn't come about because of something that happened just recently; it is what it is because of the rampant money printing, all the stimulus checks, and who knows what else--but it's been a long time coming.

As far as whether the Fed has the power to reverse inflation and get it to 2%, my answer would be yes. That's part of the reason they exist, and it's why they're so careful about adjusting interest rates--they have tremendous power over the economy.

The real question on my mind is how they're going to decrease inflation without crashing the stock market (and perhaps crypto as well). I'm not sure it can be done.

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Quote from: Husires on June 20, 2022, 06:57:26 AM

Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?
Do you think Fed can do that without causing a recession that may last for several years?

The Fed certainly has the ability to control inflation. That was proven by Fed Chair Paul Volcker in the 1980's.

I have no idea if their actions will cause a recession, but I think that if the Fed does not cause a recession then the alternative will be many years of economic stagnation.

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Quote from: Husires on June 20, 2022, 06:57:26 AM

Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?

Yes. Without the FED's BRRR, this inflation wouldn't have happened.
The real question is: do you think the FED is going to use said power to control inflation? I'm not so sure about that.

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Do you think Fed can do that without causing a recession that may last for several years?

What's wrong with a recession? Central banks act as if recessions aren't a natural part of the economic cycle. It happens. Let it crash, and restart, instead of more and more desperately trying to keep the economy booming.

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Quote from: Husires on June 20, 2022, 06:57:26 AM

Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?
Do you think Fed can do that without causing a recession that may last for several years?

Why does it have to be the FED alone?
Inflation doesn't happen just because you print money (see Japan) and shortages that drive up products can't go forever because of the basic laws of a free economy. Things will both become too expensive and demand will start going down at the same time, rising prices till that moment will make sure a lot of production is added to supply things that bring in a ton of revenue. The 2% might not be achievable if some other shit happens somewhere else in the world but the ones that think we're risking hyperinflation are just the same doomsday preachers that have been wrong so many times in the past.

Remember the last oil crisis when it triggers the shale boom?
Food prices going up and increased revenue per ha for farming will simply make farmers think of expansion, hiking up agricultural lease price to a level where previously uncultivated land become economically feasible for both the owner to lease and the farmer to work it out.

If people don't want to buy stuff and drop purchases both merchants and manufacturers have no other choice than to drop prices or go out of business, it has been always like that and this will be absolutely no difference in it.

Quote from: NeuroticFish on June 20, 2022, 09:47:37 AM

Yes, big inflation will stay for some more years, and no matter what happens next, in the near future it can go only for the worse (even higher inflation, recession, ...)

Wanna bet on the first and last past? Grin

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- If Fed had that much control over inflation then they would be able to actually get the control of the situation right now and the situation won't even be that bad in the first place and therefore i do think that this would not happen as well.

-What they are trying to do is to make people stop giving jobs, which indirectly affects the whole economy which is honestly a bad thing to do for people who are struggling with everything as well.

-They would have to provide support for the recovery hands down which means that they would have to make this target for 3-4 years as well.

-The whole market is down at the moment and they are not able to do anything as well, Europe will recover faster for sure considering the war does not go on for that long.

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Post-pandemic recovery, economic reform continues to experience many bad things. Because to provide opportunities for the Fed to restore the economy. But other than that, they don't realize that the bloated printing of money is causing a recession to eat away at every economy, especially the United States, Europe and Asia.

On the other hand, interest rates are finally a solution so that tax dissidents are increasingly burdened. Imagine the lower middle class that was hit more badly, while the upper middle class seemed to be hit by liquidity.

Intensive recovery with a target of 2 years ahead will only lead to a prolonged crisis. How can it last for 2 years without any certainty that the economy will improve?

Along with inflation, now both the Fed, the central bank and all the elite will feel dictated to secure their money to a stable subject.

NeuroticFish

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With such a heavy money-printing spree due to COVID and then the energy war and Ukraine war, I think that this is a situation/state of affairs that doesn't even have to be detailed much.
Yes, big inflation will stay for some more years, and no matter what happens next, in the near future it can go only for the worse (even higher inflation, recession, ...)
After all, inflation in US is not even as big as in (many) other countries. And yes, I know, the official numbers are not the real values; it's the same everywhere.

Unfortunately since it's bear market for Bitcoin too, people will turn their back to this incredible opportunity and lose.

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Considering the current state of the recession, it can have a bad impact on all sectors in all regions of any country. If the improvement process is expected to slow down, the FED will find it increasingly narrow to evaluate. Plus the recession that we saw clearly spiked could be even more directional when the pandemic first hit. Many are eroded to think about paying interest rates because the increase is quite large. Moreover, the expanding war market presents a major obstacle to the US doing business in the region. Nearly 40 countries are now flocking to avoid the recession by guaranteeing limiting exports of goods for the sake of supply in their respective countries because of long-term preparations.

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https://bit.ly/387FXHi lightning theory

"a couple of years" might mean more than 2 too.

We may just end up seeing something similar to the start of the pandemic too (if it's well managed). In 2007 and 2008 the UK saw a 5% inflation before the prices settled again, that'll probably be what happens this time - most inflation is driven by oil prices and those may be optional expenses in some cases too...

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WASHINGTON (Reuters) -Cleveland Federal Reserve Bank President Loretta Mester said it will take two years for inflation to fall to the central bank's 2% target, adding that it will be "moving down" gradually from the current level.

A surge in inflation, which is at its highest level in 40 years, has made hawks of nearly all Fed policymakers, only one of whom dissented earlier this week against what was the central bank's biggest rate increase in more than a quarter of a century.

"It isn't going to be immediate that we see 2% inflation. It will take a couple of years, but it will be moving down," Mester said in an interview with CBS News on Sunday.

Mester said she was not predicting a recession despite slowing growth.

"We do have growth slowing to a little bit below trend growth and we do have the unemployment rate moving up a little bit. And that is OK, we want to see some slowing in demand to get it in line with supply," Mester added, referring to forecasts submitted in the past week by participants of the Federal Open Market Committee's meeting.

Policymakers currently expect to raise the Fed's benchmark overnight interest rate, now in a range of 1.50%-1.75%, to at least 3.4% in the next six months. A year ago, the majority thought the rate would need to stay near zero until 2023.

On Friday, the Fed called its fight against inflation "unconditional."

Source: https://www.investing.com/news/economy/feds-mester-says-it-will-take-2-years-until-inflation-falls-to-2-target-2838671

Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?
Do you think Fed can do that without causing a recession that may last for several years?

Inflation that is happening now is linked to several factors that the United States may not be able to move well, so Fed should be careful about monetary policy, analyzes indicate an interest rate of at least 3.4% in the next six months, which means more rate hikes of about 50 basis points each meeting in the coming months.

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