Are U.S. Interest Rates High Enough to Beat Inflation? The Fed Will Take Its Time to Find Out

The sharp interest rate hikes of the past two years will likely take longer than previously expected to bring down inflation, several Federal Reserve officials have said in recent comments, suggesting there may be few, if any, rate cuts this year

by Christopher Rugaber
Independent.co.uk

The sharp interest rate hikes of the past two years will likely take longer than previously expected to bring down inflation, several Federal Reserve officials have said in recent comments, suggesting there may be few, if any, rate cuts this year.

A major concern expressed by both Fed policymakers and some economists is that higher borrowing costs aren’t having as much of an impact as economics textbooks would suggest. Americans as a whole, for example, aren’t spending much more of their incomes on interest payments than they were a few years ago, according to government data, despite the Fed’s sharp rate increases. That means higher rates may not be doing much to limit many Americans’ spending, or cool inflation.

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