Fed Action, Once Again, Way Too Little & Way Too Late

The Fed’s shockingly irresponsible Monetary Policy is responsible for most of the inflation problem.

At its May 4 meeting, the Fed decided to raise the Federal Funds rate by half a percentage point, or 50 basis points (BPS). That’s the largest single rate hike in 22 years. This raises the fed funds rate to the 1% range. Considering inflation is running at an 8.5% annual rate and that we have been facing the inflation problem since March 2021, the Fed action is way too little and way too late.

The inflation rate for the month of April will be reported at the end of next week. The CPI, or Consumer Price Index, is expected to be less than the 1.2% monthly rate recorded in March, but the number will be high enough to raise the annual inflation number close to 9%.

Brace for Inflation of 10%

Because producer prices have been rising at a more than a 10% rate for the last four months and because the world is about to experience a food shortage that will drive up food prices, the CPI released in June will be very high. That means the annual inflation rate could exceed 10% by summer. Clearly, that is unacceptable.

The Fed uses a different measure for inflation. It uses the Personal Consumption Expenditure (PCE), which is a measure of how consumers react to…