Before diving into the dissection of what Jeremy Seigel from the Wharton Business School, an acclaimed university wishes to convey, let us better understand the matter on which he wishes to share his so important opinions.
The term inflation is not foreign to anyone. And even more in the rising periods. Adding fuel to the fire, nobody likes him very much, except for the tiny population he enjoys.
What is Inflation?
Inflation basically refers to the rate of increase or upscaling of prices over a given or observed period of time. Inflation is generally used to mention a broad measure. It is the overall price increase or increase in the cost of living in a country. No wonder it’s not a popular word.
Officials who are part of the Federal Reserve then advised that Americans should take them at their word and believe that all measures to curb inflation would be taken, including a 50 basis point increase in interest rates. It was quoted that this is on the table for their next meeting which is due to take place in May.
“If we have to do 50, we will,” are the words spoken by San Francisco Fed President Mary Daly at the Bloomberg Equality Summit on Wednesday. She also added that she would support a 25 basis point increase if needed.
Markets ended last week in a panic that followed three weeks of previous losses. This was due to the Dow Jones points slipping 981 points in a daily loss of 2.82%.
“We really need to slow down this very hot economy and get this inflation under control,” Jeremy Siegel told CNBC on Friday. “I think the market wants it.”
After President Jerome Powell said on Monday that the central bank may be ready to take such a step if necessary to control the strongest inflationary pressures in 40 years, investors increased their bets on a hike of a half -percentage point at the May 3-4 Fed meeting. Meet. Despite the uncertainties created by Russia’s invasion of Ukraine, other leaders joined Powell in stressing the need to fight inflation.
Powell’s remarks, along with the Fed’s decision in March to begin raising interest rates from historic lows set during the recession, demonstrate that the central bank is serious about its job. However, with a stifling labor market and rising energy and commodity costs following the conflict in Ukraine, the Fed could be called upon to do more than the markets anticipate.
Federal Reserve officials raised interest rates by a quarter point this week, the first-ever increase since 2018, and plan six more hikes this year, taking the rate to 1.9%, with the rate climbing to 2.8% by the end of 2023. .
The consumer price index jumped 7.9% in February, its highest level since 1982; the Fed’s 2% inflation target is based on a separate indicator, the personal consumption expenditure price index, which rose 6.1% in the year to January.
James Bullard of the St. Louis Fed, which expects rates to rise to 3% by the end of the year, said at another meeting that officials should act much faster because the consequences of inaction will be severe.