Feds Ignore The Clear Signs Of Inflation As Economy Suffers

Written By BlabberBuzz | Saturday, 31 July 2021 02:15

The Federal Reserve open market committee has voted unanimously to maintain the central bank's easy money policies, repeatedly dismissing soaring inflation as 'transitory' and saying COVID-19 still poses dangers to the economy.

The 11-member committee voted on Wednesday to keep the federal funds rate near zero and maintain overwhelming the market with money through massive bond purchases 'until substantial further progress' is made on boosting employment.

It occurs after the 12-month inflation rate hit 5.4 percent in June, the greatest level in 13 years, leading to calls to tighten monetary policy and prevent prices from getting out of hand.

'Inflation has increased notably and will likely remain elevated in the coming months,' Fed Chair Jerome Powell admitted in a press conference, before once again accusing the price hikes on temporary factors like supply chain disruptions.

Powell announced the Fed expects inflation to soon subside, while further acknowledging 'the possibility that inflation could be higher and more persistent than we expected.'

DESANTIS'S WILL LEAVE COVID RESTRICTIONS UP TO THE PARENTS

DESANTIS'S WILL LEAVE COVID RESTRICTIONS UP TO THE PARENTS

'The path of the economy continues to depend on the course of the virus,' the committee announced in a statement.

'Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain,' it continued.

The Fed has two central mandates: keeping inflation at 2 percent annually, and achieving 'maximum employment'.

WATCH: MIKE PENCE ON THE TRADITIONAL FAMILY

WATCH: MIKE PENCE ON THE TRADITIONAL FAMILY

The two mandates often conflict, because the Fed tries to keep inflation in check by boosting interest rates, and seeks to boost employment by lowering interest rates.

The Fed views a checked amount of inflation as good because it supports spending and business investment, instead of hoarding cash.

JUSTICE FOR ALL BUT ONE IN MACEDONIA

JUSTICE FOR ALL BUT ONE IN MACEDONIA

Though out-of-control inflation can be risky, eroding the spending power of consumers and hitting low-income families and elderly pensioners the hardest.

The U.S. central bank slashed its benchmark overnight interest rate to near zero last year and proceeded to overwhelm the economy with money through monthly bond purchases.

The Fed announced on Wednesday that it would continue indefinitely its monthly purchases of $80 billion in federal debt and $40 billion in mortgage-backed securities.

WATCH: TALIBAN GOES ON INDIANA JONES STYLE ADVENTURE

WATCH: TALIBAN GOES ON INDIANA JONES STYLE ADVENTURE

Economic growth has been firm enough that the Fed at its June policy meeting started conversations regarding when and how to reduce the monthly purchases of Treasuries and mortgage-backed securities.

The Fed's latest policy statement comes as the economy is maintaining a strong recovery from the pandemic recession, with solid hiring and spending.

The central bank took note of that improvement by observing, for the first time since the pandemic started to ease, that the economy is moving toward making the 'substantial further progress' it wants to see before reducing, or tapering, its $120 billion a month in bond purchases.'

This could be an early hint that the policymakers will start art reducing - or 'tapering,' in Fed parlance - their monthly bond purchases later this year.

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