this post was submitted on 20 Mar 2024
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United States | News & Politics
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Curious how long they'll be able to go on with the narrative that inflation will go down and interest rates will be reduced soon...
Seeing the CPI plotted over time helps to get a clearer feel for how it is changing:
https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm
Based on that chart, things don’t look as dire as the cited “~20% since 2020” stat. Yeah, we’re all still feeling the effect but it seems that the rate has dropped into normal-ish territory. Now the questions are “How close are businesses to really feeling the hurt of the lack of cheap borrowing?” and “If/when we drop interest rates how much immediate effect will that have on inflation? How much can we drop it without really spiking inflation again?”
Yes, you are right, but during most of that time, interest rates neared zero. I like to plot the sum of YoY inflation and interest rates since it is more stable and gives a feeling of how much headroom there actually is.