The inflation rate has still not reached the 2 percent goal.
Federal Reserve Governor Michelle Bowman recently said that additional interest hikes “will likely be needed” to further reduce inflation. The Federal Reserve’s duty is to regulate America’s economy, and they have found that keeping America’s inflation rate at around a 2 percent increase per year allows for natural economic fluctuations while reducing the risk of a dramatic financial crash. They endeavor to control America’s inflation rate by raising the interest rate that banks are required to charge to borrow and lend money.
American inflation rose to a 40-year high of 9.1 percent in June 2022, and the Federal Reserve quickly increased interest rates in response. As of July 2023, the Fed has increased interest rates to 5.5 percent, and the inflation rate has lowered to 4.6 percent. While a significant decrease, it is not within their 2 percent goal.
“Economic activity has grown at a moderate pace, and even as banks have been tightening their lending standards in response to higher interest rates and funding costs, lending to businesses and households has continued to expand,” Ms. Bowman stated in Atlanta. “Given these developments, I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the [Federal Open Market Committee’s] goal,” she added.
As the Lord Leads, Pray with Us…
- For Federal Reserve Governor Bowman as she assesses and provides her input to the board.
- For Chairman Jerome Powell to seek God’s guidance as he heads the Federal Reserve.
- For Americans as they seek to manage the financial pressures of both inflation and interest rate hikes.
Sources: TheHill, Investopedia, Forbes
