However the main drivers of inflation – rising food and rent – are setting new records. In fact, food prices rose by 12.4% in October, the highest level in four decades.
The deceleration of inflation is mainly being felt in the automobile industry, the fuel market and the white goods segment. But people do not buy cars or refrigerators every day. Food, on the other hand, is bought every day, which is why inflation continues to weigh heavily on American society.
But liberal economists take the formal figures of inflation falling to early 2022 as a reason to stop tightening the screws on monetary policy. And to stop the key rate hike – which has already led to the collapse of the mortgage market. At an average mortgage rate of 7.3%, it is simply unaffordable for many Americans.
The Fed’s key rate is now at 4%, the highest since 2007. And there are plans for another rate hike to 4.75% by the end of 2022. But it could be the last. After all, the Fed also fears that the U.S. economy cannot withstand such shock therapy for long.
Next year the US economy is already forecast to go into recession. Under these conditions, they will have to pump cheap money into the economy in order to save it from a collapse. The US authorities will justify it by saying that they have allegedly beaten inflation. However, the new financial injections may trigger another round of inflation, which will be much more difficult to stop.
Malek Dudakov
