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Sunday, February 26, 2023

What will the US do to halt its persistent high inflation?

The latest PCE inflation (below) revered its decline path and caused the stock market to fall heavily.


What will the US do to bring down the sky-high inflation?  Well, the Fed may need to hike its rate much higher than expected to cool the prices.

How valid is the projected 6.5% rate as stated by the study?

Let's use the Taylor's rule to verify this validity.  The chart is showing that a rate above 6.5% is more appropriate for the current inflation situation.  We had also stated previously that the US Fed won't reduce its rate in 2023.


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