Knowledge Is Power

No one rings the all clear bell when things are ready to boom so being patient and being selective is paramount during volatile times.

That’s only going to make the task of taming inflation without tipping the economy into a recession more challenging for the Federal Reserve.

Do nothing and the 40-year high inflationary figures get even worse which would mean the pain needed to control prices in the future would be immense. Raise rates now and at least begin to put a cap on the issue but whether it’s now or later, patients do not like to take the medicine!

Doubts about the economy’s prospects are creeping in, however. The latest Bloomberg monthly survey conducted in early April showed economists put a 27.5% chance of recession within the next year, up from 20% in March.

The key question is whether these methods will be able to push rates to a level that are neither too loose nor too restrictive and provide a “soft landing” for the economy as it cools down but doesn’t come to a halt. The volatility we have seen this year is directly related to if the Fed can pull this off.

The figures are a welcome respite from the sustained heated core increases of late, and fuel costs look to ease in response to the recent pullback in oil prices. However, food, rent, and a few other items look to remain troublesome and act to slow the expected retreat in inflation in the year ahead.