'The Fed’s preferred price metrics on Friday are projected to show inflation remained elevated in April, running more than double the central bank’s goal..'
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US Inflation Set to Stay Firm.., May 20, 2023
'Inflation later roared back, forcing the hand of Paul Volcker, who took over at the Fed in 1979, Richardson said. Volcker brought double-digit inflation to heel — but only by raising borrowing costs high enough to trigger back-to-back recessions in the early 1980s that at one point pushed unemployment above 10%.
“If they don’t stop inflation now, the historical analogy [indicates] it’s not going to stop, and it’s going to get worse,” said Richardson..''A premature retreat could cause the Fed to lose its handle on the situation, presenting even grimmer options down the road. That’s what happened in the 1970s, [Gary Richardson, a Federal Reserve historian,] said.
Quick rewind: The chair of the Federal Reserve at the time, Arthur Burns, hiked interest rates dramatically between 1972 and 1974. Then, as the economy contracted, he changed course and started cutting rates.
Inflation later roared back, forcing the hand of Paul Volcker, who took over at the Fed in 1979, Richardson said. Volcker brought double-digit inflation to heel — but only by raising borrowing costs high enough to trigger back-to-back recessions in the early 1980s that at one point pushed unemployment above 10%.
“If they don’t stop inflation now, the historical analogy [indicates] it’s not going to stop, and it’s going to get worse,” said Richardson, an economics professor at University of California, Irvine.'
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The Fed could be on the verge of repeating its 1970s mistake, Fed historian says, May 8, 2023
'Food prices in the EU rose 16.6 per cent in the year to April, according to Eurostat, far in excess of a headline inflation rate of 8.1 per cent. Some of the biggest surges have been in the cost of staples, with the cost of eggs rising 22.7 per cent over the period, whole milk up 25 per cent, and sugar by 54.9 per cent.
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But the struggles faced by shoppers hit by the soaring cost of their weekly shop mean economists fear politicians will continue to resort to price caps, regardless of their effectiveness.''Europe’s retailers and governments are locked in their fiercest tussle over food costs for 50 years, with policymakers resorting to price controls to tackle the worst cost of living crisis for a generation.
Despite lower energy prices easing overall price pressures, growth in the cost of food has continued to soar, prompting increasingly unconventional market interventions from politicians trying to assuage public anger.
Food prices in the EU rose 16.6 per cent in the year to April, according to Eurostat, far in excess of a headline inflation rate of 8.1 per cent. Some of the biggest surges have been in the cost of staples, with the cost of eggs rising 22.7 per cent over the period, whole milk up 25 per cent, and sugar by 54.9 per cent.
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While the measures have been successful in keeping a lid on the cost of essentials, economists think they are a poor fix for high food prices.
A World Bank report on Thursday called on European governments to provide more “targeted policy interventions and social safety nets” to support those suffering from the cost of living crisis. However the multilateral lender stressed that price controls and subsidies were “suboptimal as they distort price signals for consumers and producers.”
Hungary’s central bank governor György Matolcsy went further in a parliamentary hearing in December. “You can’t win this battle with old tools,” he said. “Price caps and all similar ideas already proved ineffectual during socialism.”
“You may cap one type of milk, but the inflation basket contains dozens of types,” said Péter Virovácz, an analyst at ING Bank.
But the struggles faced by shoppers hit by the soaring cost of their weekly shop mean economists fear politicians will continue to resort to price caps, regardless of their effectiveness.'
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Europe’s politicians impose price caps to address soaring food costs, May 21, 2023
ContextECB Seen Keeping Rates High for Longer Amid Sticky Core Prices, May 15, 2023
US prices stay high, showing inflation pressures persist, May 10, 2023
Munger Warns Banks Stuck with Commercial Property Debt, FT Says, April 30, 2023
'U.S. inflation is currently 6.8%, the highest rate in the developed world .. Almost universally, rates have been kept lower than the Taylor Rule had suggested.,' December 11, 2021
(Global Stagflation)(Inflationary damage) - '..acc to Taylor Rule .. ECB rates should be 7.2 ppts higher for the entire Eurozone..'(Global Stagflation)(Inflation out of control) - Inflationary Psychology Has Set In. Dislodging It Won’t Be Easy.(Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..'