The biggest of the Fed big shots, Chairperson Jerome Powell is widely expected to proclaim the need for even higher interest rates to “combat” inflation.
It’s called a “retreat” and if you receive an invitation from the host, the Federal Reserve Bank of Kansas City, you’re definitely on the A-list of those who count among the nation’s economists. The idea is that if they can get away from the drab offices in the big cities, maybe a new idea will pop into their heads, however unlikely that may seem.
The concern this year is that inflation remains at levels considered in the “too high” range. This is despite the recent drop in the price of gas at the pump. The problem remains with the lofty CPI and PPI numbers – these need to come down according to those who closely and religiously practice the dismal science of economics.
So, the solution, widely acknowledged by experts and financial journalists, is to keep raising interest rates and that’s what Jerome Powell will be expressing when he makes his big speech on Friday. How much of an increase is debated far and wide but it’s likely to be another ¾% upward for the fed funds rate.
They want the stock market and the real estate market to cool off even more than they’ve already cooled off. How this is related to the CPI and the PPI is the subject of many economics PhD dissertations which could be found and studied, but the main thing is: if Powell and the retreat crowd say interest rates need to go up, then they’re going up.
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