Inflation at Three-Year High, Fed Holds Rates, Economist Says Higher Prices May Persist
8 reported
Inflation has reached a three-year high, according to a report from NPR. The Federal Reserve, under new chair Kevin Warsh, chose not to raise interest rates this month. Political economist Mark Blyth of Brown University stated that high inflation could become the new normal, citing factors such as the reversal of globalization, the end of China and Eastern Europe's impact on lowering wages and prices, and climate change causing supply shocks. Blyth noted that inflation affects people differently based on income, with lower-income individuals suffering more. He identified winners as those with large fixed-rate mortgages and stock market investors, while the bottom 80% of income earners are generally losers, with the bottom 40% suffering the most.
What’s reported
Inflation is at a three-year high.
The Federal Reserve, led by new chair Kevin Warsh, did not raise interest rates this month.
Mark Blyth, a political economist at Brown University and co-author of "Inflation: A Guide For Users And Losers," stated he believes inflation will be "higher for longer, if not permanently."
Blyth attributed the last 30 years of low inflation to China and Eastern Europe joining the global workforce, the IT revolution, and globalization, which he said are now reversing or ending.
Climate change is described as a series of supply shocks that could contribute to sustained higher inflation.
Blyth said inflation varies across income distribution, with those shopping at Whole Foods being less affected than those shopping at Dollar General.
Winners from inflation include borrowers with large fixed-rate mortgages and those with savings in the stock market.
Blyth stated the "bottom 80%" of income earners are losers from inflation, with the "bottom 40%" suffering the most.
Key figures
Kevin Warsh, new chair of the Federal Reserve
Mark Blyth, political economist at Brown University, co-author of "Inflation: A Guide For Users And Losers"
Darian Woods, NPR correspondent from The Indicator podcast
Wailin Wong, NPR correspondent from The Indicator podcast
Sources: NPR
