Who’s Up For More Rate Hikes?

They can talk all they want about all the people who came back to work post-COVID, but, what are they to do with the money if rates keep going up and the cost of living is going up? Of course, that’s one of the things they say is heating up the economy, all the people back to work buying. But, buying what? Big ticket items are still limited, be it housing, autos, boats, or motorcycles. I could understand if there was a glut of these, but, there aren’t

Fed’s Bowman says more US rate hikes likely will be needed

The U.S. Federal Reserve will likely need to raise interest rates further to bring down inflation, Governor Michelle Bowman said on Saturday.

Bowman said she supported the Fed’s quarter-point increase in interest rates last month, given still-high inflation, strong consumer spending, a rebound in the housing market and a labor market that is helping to feed higher prices.

“I also expect that additional rate increases will likely be needed to get inflation on a path down to the FOMC’s 2 percent target,” she said in remarks prepared for delivery to the Kansas Bankers Association, referring to the Fed’s rate-setting panel, the Federal Open Market Committee.

Monetary policy is not on a “preset course,” she also said, and data will drive future decisions.

“We should remain willing to raise the federal funds rate at a future meeting if the incoming data indicate that progress on inflation has stalled.”

Certainly, the higher rates combined with very high costs of houses and autos have stifled economic activity, along with a dearth of inventory. In fairness, many started opting out of purchasing a used vehicle at a much higher interest rate (consider the gold standard around Raleigh was SECU, which had been at 3.75 with autopay just a year ago, and now is at least 2 points higher, usually around 6.25) combined with the higher cost of used cars (which were ridiculously high) and those costs did come down, but, only so much, because inventory is still limited.

Bowman’s use of the plural “rate increases” in her remarks on Saturday indicates she thinks the Fed will need to go higher than that.

After the most recent rate hike, Fed Chair Jerome Powell left the door open to another increase in September, but also signaled that cooler data could allow a pause.

Bowman noted some progress on inflation, which by the widely followed consumer price index slowed to a 3% annual rate in June, down from 9% in the middle of last year.

Not sure that Americans are really noticing things getting better

Back-to-school shopping hit by inflation, higher prices

Back-to-school shoppers can’t escape inflation as they prepare for the 2023-2024 school year.

State of play: Higher prices and demand for electronics are taking a bigger bite out of consumer budgets — and driving record spending — according to the National Retail Federation’s annual survey. (snip)

Families with children in elementary through high school plan to spend an average of $890.07 on back-to-school items about $25 more than last year’s record, per NRF’s survey of 7,843 consumers.

And Biden and the Democrats have done what to help this? Oh, right, made it worse.

Inflation Is Cooling. Food Inflation Could Get Worse.

nflation has cooled in many countries, but in most of them, food inflation remains rampant and there are reasons to fear it may accelerate.

A combination of disrupted exports, unusually hot weather and Russia’s continuing pounding of Ukraine, one of the world’s largest grain producers, is likely to add fresh momentum to the main source of global inflation.

U.K. food prices rose 17.4% in the year through June, while Japanese prices were up 8.9% and French prices were up 14.3%. While food inflation has slowed slightly in the U.K. and France, it has picked up in Japan. In each country, food prices are rising much more quickly than prices of other goods and services.

The U.S. has fared better, with food prices up 4.6% from a year earlier in June, more than double the rate of inflation targeted by the Federal Reserve but well down on the August 2022 peak of 13.5%.

Doing better, because the U.S. doesn’t really depend on food products exports from Russia or Ukraine, but, still, way higher than it was when Biden took office. I was walking in the aisle with soup Sunday, and Progresso and Campbell’s non-condensed were up around 50 cents from a few years ago. Breyer’s Ice Cream is about a dollar more. And with Biden causing fuels and energy to stay high those prices will continue to go up.

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