Fed Bank President Sends Dire Warning about Inflation: ‘It’s Spreading Out’
The comments below are an edited and abridged synopsis of an article by Jack Phillips
Neel Kashkari, president of the Minneapolis Fed, has warned that the current rate of inflation is troubling and will spread across the country. He said that wages are increasing for many Americans; however, so are the cost of goods and services. Workers will suffer a real wage cut because of price pressures.
In July, the Bureau of Labor Statistics released its CPI data, showing a key metric for inflation rose 9.1% year-over-year in June, the highest figure seen since the early 1980s. Another metric, the PPI, shot up by 11.3% in June, which is also the highest in decades.
Some Republicans and economists have said that multi-trillion-dollar federal government spending packages around Covid have triggered high inflation, while some have blamed it on lockdowns of supply chains that have not fully rebounded.
Without mentioning government spending, Kashkari blamed the price surge on the war in Ukraine and Covid.
A new bill proposed by Senator Joe Manchin (D) and Senate Majority Leader Chuck Schumer (D) that claims to reduce inflation won’t do much, Kashkari said. Instead, he argued that the Fed’s monetary policies will drive it down.
Last week Fed officials again raised interest rates by 75 basis points. It’s the second time in a month that the central bank has done so.