The Federal Reserve is poised to raise the federal funds rate by 0.75% on July 27 in a bid to rein in runaway inflation, according to The Wall Street Journal, but some economists tell the Daily Caller News Foundation that won’t be enough.
Federal Reserve officials over the past week have indicated they will back a 0.75%, or 75 basis point, increase in the federal funds rate as the next step in efforts to get inflation under control, according to the WSJ. However, inflation is so rampant that some economists tell the DCNF even more aggressive action is needed.
“As to will a 75 basis point hike do the trick in containing inflation, I doubt it,” Mark Vitner, Managing Director & Senior Economist at Wells Fargo, told the DCNF.
“The oft-cited strength of household, corporate and state and local government balance sheets as a reason to expect only a modest-to-average recession is also the reason why it will be so difficult to bring inflation down on a sustainable basis,” Vitner added.
The Bureau of Labor Statistics announced data for two key inflation metrics last week for year-over-year changes in the month of June. The Consumer Price Index (CPI) jumped up 9.1%, and the Producer Price Index (PPI) increased 11.3%, suggesting that inflation is still surging.
“0.75% is not enough, and 1% frankly isn’t enough either at this late stage of the game,” E.J. Antoni, research fellow for regional economics at The Heritage Foundation, told the DCNF.
“The last time inflation was this high, the federal funds rate was over 13%, so they are laughably behind the curve,” Antoni added. The federal funds rate, the Fed’s prime tool for moving interest rates, is currently between 1.50-1.75%, according to the New York Fed.
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