‘We’ll Still Have Inflation’ For The Next Two Years, Harvard Economist Warns
One Harvard University economist is warning that high inflation will remain through 2023.
Last week, the Bureau of Labor Statistics reported that in December consumer prices rose by 7% over the previous year — the highest rate in roughly 40 years. Likewise, “real average hourly earnings” — which consider the effect of inflation — decreased by 2.4% from December 2020 to December 2021, slashing the purchasing power of American consumers.
In an interview with Fox Business, Kenneth Rogoff — a Harvard economist and chess Grandmaster — explained that “it’s not so easy to raise interest rates to fight inflation when public and private data is high, when the stock market is high, when housing prices are high, when the economy is still weak.” Central bankers willing to do so would have “a lot of stomach.”
Rogoff added that policymakers at the Federal Reserve must balance the need to cut runaway inflation while avoiding a recession. “And I think the question is: How much are they going to have to step on the brakes to really slow inflation down?” he said, predicting that the Federal Reserve will be conservative in their rate increases.
As the central bank has not used rate hikes to kill high inflation for decades, Rogoff said “it’s not clear how it’s going to work.” – READ MORE
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