Interest rates could gradually increase from next March
WASHINGTON (Nexstar) – Americans are seeing prices continue to rise everywhere from groceries to the gas station. Republicans blame Democrats. Democrats blame the problems, including high demand for goods that cannot be produced or imported quickly due to pandemic-related labor shortages around the world.
“The policies that were put in place this year by the Biden administration and members of this body have led to runaway inflation,” said Oklahoma GOP Senator James Lankford.
Now Federal Reserve Chairman Jerome Powell has said the Fed is considering measures to prevent high inflation from becoming permanent.
“High inflation imposes significant hardship, especially on those least able to afford the higher costs of basic necessities such as food, shelter and transportation,” said Powell.
First of all, the Fed plans to phase out purchases of bonds and Treasury securities, then it could gradually increase interest rates as early as next March.
These interest hikes mean consumers will see higher rates on mortgages and credit cards, but the combination of these measures should help fight inflation as it should help dampen demand.
Powell said those actions are projections based on the fact that the economy remains strong with low unemployment, “and no one knows for sure where in a year or more.”
The Fed chairman said they will continue to assess necessary actions as the pandemic continues.