Inflation will not fall to 2% target for two years, Fed's Mester says

[Poker Player]

• Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?

Of course it has the power. As odolvlobo says:

The Fed certainly has the ability to control inflation. That was proven by Fed Chair Paul Volcker in the 1980's.

• Do you think Fed can do that without causing a recession that may last for several years?

I doubt this. The most recent precedent is the Reagan era. It came from the term of Jimmy Carter who with his policies left an economic situation very similar to now. With Reagan the interest rates went up a lot and a recession was provoked, but it was necessary, as if you had to pull someone's tooth so that it would not get infected. It will hurt, but not pulling it out will be worse:

Reaganomics

"The inflation rate, 13.5% in 1980, fell to 4.1% in 1988, in part because the Federal Reserve increased interest rates (prime rate peaking at 20.5% in August 1981). The latter contributed to a recession from July 1981 to November 1982 during which unemployment rose to 9.7% and GDP fell by 1.9%."

What followed was an era of economic growth, low energy prices and moderate inflation.

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[kensaii]

It is normal to not fall to those levels that quickly. In fact, it could even hurt you if it hurts that quickly, meaning if the prices stay that way and do not go up, the growth would be stopped and that would hurt the economy as well, nobody would make a profit.

Definitely 2% is great, but it is great when it is there forever, if you could lock it for the next 100 years that would be insanely great. But if you go to 7%+ and your gas prices increase to a whole new record levels, then making the inflation 2% again could hurt more than it helps. This is why it needs to be dropping small by small, lower and lower, which will make sure that eventually it will be there but since it has been a while, everyone will be ready.

That is correct, rapid deflation isn't healthy for the economy either. I highly doubt that it'll happen in 2 years as OP mentioned, a couple could possibly mean more than 3-4, which is a more realistic approach. As long as the war continues, we're going to have a huge burden on the economy, which is also susceptible to worsen in the future if action isn't taken with oil, wheat and electricity.

Yeah, 2% right now doesn't look like a lot, great also if someone is optimistic. But then again, we now have the looming of war and its a burden on our economy. Food and energy shortage are also in effect. Seem like a tough time is ahead for both the US and the world economy. Guess the statement from FED is too good to be true.

[Wind_FURY]

I believe it's true. Inflation might not fall to 2% in two years. Probably longer. Jerome Powell released a statement yesterday during an FOMC meeting and said that they ave started to understand that they now have no understanding about the current inflation.

What? It's a joke by me? NO, he actually said something like that!

[Husires]

I believe it's true. Inflation might not fall to 2% in two years. Probably longer. Jerome Powell released a statement yesterday during an FOMC meeting and said that they ave started to understand that they now have no understanding about the current inflation.

If he had said this statement, it is a good step forward, as the lack of knowledge of the nature of inflation suggests that they will not continue with a single monetary policy, but that policies may change according to the variables, and therefore we may not witness more interest rate hikes in the coming months.

Continuing to raise interest rates would be disastrous.

[Gyfts]

Remember when the fed said inflation was transitory? Also, isn't it absurd that the U.S. government admits to its currency holders that their purchasing power will not go down to the luxury of 2% year over year reduction until 2024, rather they must suffer with triple that amount and more until then. After all the suffering, then only are you rewarded with a 2% yearly reduction in spending power.

Anyone that understood the ramifications of endless money printing recognized there wasn't a way to lower inflation without effecting the interest rates severely and slowing the economy into a recession, the fed are years behind.

[darxiaomi]

So, you read 6854754 books of economy, know for experiences in 812231237 times, that INFLATION ITS A MONETARY THING. And know if you print 89123182738172387123 ton of dolars obviusly in a short time you have inflation but, after doing all the things bad and making the things you dont have to do say " Ohhhhh i dont know why its the inflation coming, its multicausal" or "its because the war in Ukrayne" pure shit.

And being for a country with 60% annual inflation all the years i can say tou you the goverment say pure lies about it, because they print to cover their bad administration, the print to keep the wheel rolling, they print to re-buy his own state bonds.

I know in some times of emergency you need to print without respalding (some extremes circunstances) but after that not say "ohhh i dont know where its this coming from".

[Semar Mesem]

America's economy has a strong influence globally, if inflation occurs in the USA then the direct impact is that many countries that export to the USA will get a new policy, I work in a food raw material company with customers from the USA, and the impact is felt because they reduce imports more than 50% since the end of 2021.

[Wind_FURY]

I believe it's true. Inflation might not fall to 2% in two years. Probably longer. Jerome Powell released a statement yesterday during an FOMC meeting and said that they ave started to understand that they now have no understanding about the current inflation.

If he had said this statement, it is a good step forward, as the lack of knowledge of the nature of inflation suggests that they will not continue with a single monetary policy, but that policies may change according to the variables, and therefore we may not witness more interest rate hikes in the coming months.

It's actually not. In the context of how he said it, I believe he was trying to give everyone the thought that the might not have no other choice but to let the economy go have a "hard landing", because in his words it was something like, "their options in how to fix inflation without causing a recession is narrowing".

Continuing to raise interest rates would be disastrous.

Ser, it's either raise the interest rate, or hyperinflation. Save the Dollar, or the economy? History has taught us that since 2008, the Fed always tightened after QE, and went to QE again.

[FanEagle]

I believe it's true. Inflation might not fall to 2% in two years. Probably longer. Jerome Powell released a statement yesterday during an FOMC meeting and said that they ave started to understand that they now have no understanding about the current inflation.

What? It's a joke by me? NO, he actually said something like that!

We do have a fucking clue to be fair . We have a high inflation because we have a lot of money. Just in the past 3 years, USA printed nearly half of all the money they ever printed. Yes that is right, I do not know when was the first time they printed dollars, but it must be over 200 years now, so for the first 197 years, they printed as much as they printed for the past 3 years. If that doesn't tell you a good reason why inflation is high, then nothing would.

Same happened in many countries, and maybe the numbers wouldn't be similar but that is all about what's going on right now, the amount of money printed all around the world is too high and that's causing all this trouble.

[Wind_FURY]

I believe it's true. Inflation might not fall to 2% in two years. Probably longer. Jerome Powell released a statement yesterday during an FOMC meeting and said that they ave started to understand that they now have no understanding about the current inflation.

What? It's a joke by me? NO, he actually said something like that!

We do have a fucking clue to be fair . We have a high inflation because we have a lot of money. Just in the past 3 years, USA printed nearly half of all the money they ever printed. Yes that is right, I do not know when was the first time they printed dollars, but it must be over 200 years now, so for the first 197 years, they printed as much as they printed for the past 3 years. If that doesn't tell you a good reason why inflation is high, then nothing would.

Same happened in many countries, and maybe the numbers wouldn't be similar but that is all about what's going on right now, the amount of money printed all around the world is too high and that's causing all this trouble.

It was the Fed who just admitted that THEY currently now understand that they have little understanding about the current inflation, and how to fix it. Because, they did the necessary steps, but inflation keeps going higher and higher.

BUT this is what EVERYONE of plebs should understand. The Federal Reserve doesn't care about our investments in stocks, in commodities, or in Bitcoin. They're main concern is to fight inflation, and maintain the U.S. Dollar's value AND its status as a Global Reserve Currency. Because if hyperinflation happens, it will END the U.S. Dollar's status as a Global Reserve Currency, and END the United States' global dominance over the world. I believe the Fed will crash the economy through more tightening and rate hikes if they need to, to save the Dollar.

[teosanru]

WASHINGTON (Reuters) -Cleveland Federal Reserve Bank President Loretta Mester said it will take two years for inflation to fall to the central bank's 2% target, adding that it will be "moving down" gradually from the current level.

A surge in inflation, which is at its highest level in 40 years, has made hawks of nearly all Fed policymakers, only one of whom dissented earlier this week against what was the central bank's biggest rate increase in more than a quarter of a century.

"It isn't going to be immediate that we see 2% inflation. It will take a couple of years, but it will be moving down," Mester said in an interview with CBS News on Sunday.

Mester said she was not predicting a recession despite slowing growth.

"We do have growth slowing to a little bit below trend growth and we do have the unemployment rate moving up a little bit. And that is OK, we want to see some slowing in demand to get it in line with supply," Mester added, referring to forecasts submitted in the past week by participants of the Federal Open Market Committee's meeting.

Policymakers currently expect to raise the Fed's benchmark overnight interest rate, now in a range of 1.50%-1.75%, to at least 3.4% in the next six months. A year ago, the majority thought the rate would need to stay near zero until 2023.

On Friday, the Fed called its fight against inflation "unconditional."

Source: https://www.investing.com/news/economy/feds-mester-says-it-will-take-2-years-until-inflation-falls-to-2-target-2838671

• Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?
• Do you think Fed can do that without causing a recession that may last for several years?

Inflation that is happening now is linked to several factors that the United States may not be able to move well, so Fed should be careful about monetary policy, analyzes indicate an interest rate of at least 3.4% in the next six months, which means more rate hikes of about 50 basis points each meeting in the coming months.

Inflation is not something that changes so suddenly so if there is 7-8% in one year chances are it will decline quite slowly and then comes to a subtle number and stabilizes on to something . Currently we are in situation where the inflation would rise as the money supply is rising continuously and there is no signs of some great economic growth along with that. But Fed can do that only by ensuring there is enough GDP growth so that there are enough people in the economy to absorb inflation.

[Fortify]

WASHINGTON (Reuters) -Cleveland Federal Reserve Bank President Loretta Mester said it will take two years for inflation to fall to the central bank's 2% target, adding that it will be "moving down" gradually from the current level.

A surge in inflation, which is at its highest level in 40 years, has made hawks of nearly all Fed policymakers, only one of whom dissented earlier this week against what was the central bank's biggest rate increase in more than a quarter of a century.

"It isn't going to be immediate that we see 2% inflation. It will take a couple of years, but it will be moving down," Mester said in an interview with CBS News on Sunday.

Mester said she was not predicting a recession despite slowing growth.

"We do have growth slowing to a little bit below trend growth and we do have the unemployment rate moving up a little bit. And that is OK, we want to see some slowing in demand to get it in line with supply," Mester added, referring to forecasts submitted in the past week by participants of the Federal Open Market Committee's meeting.

Policymakers currently expect to raise the Fed's benchmark overnight interest rate, now in a range of 1.50%-1.75%, to at least 3.4% in the next six months. A year ago, the majority thought the rate would need to stay near zero until 2023.

On Friday, the Fed called its fight against inflation "unconditional."

Source: https://www.investing.com/news/economy/feds-mester-says-it-will-take-2-years-until-inflation-falls-to-2-target-2838671

• Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?
• Do you think Fed can do that without causing a recession that may last for several years?

Inflation that is happening now is linked to several factors that the United States may not be able to move well, so Fed should be careful about monetary policy, analyzes indicate an interest rate of at least 3.4% in the next six months, which means more rate hikes of about 50 basis points each meeting in the coming months.

It would be nice to see inflation fall under that target within two years, but unfortunately we seem to be on a runaway train and nobody knows how to turn the brakes on. The fact that inflation is on this course is partly due to the reckless and extended cheap money that the Fed pumped into the market for over a decade, which was further topped up during Covid. It'll be interesting to see whether it is a slow and steady wind down, or a disorganized economic crash, but you should be careful putting any faith into the predictive abilities of the fed, because they are often reactive instead of proactive - they go with whatever is the most convenient policy of the current day instead of the best for long term health.

[og kush420]

It would be nice to see inflation fall under that target within two years, but unfortunately we seem to be on a runaway train and nobody knows how to turn the brakes on. The fact that inflation is on this course is partly due to the reckless and extended cheap money that the Fed pumped into the market for over a decade, which was further topped up during Covid. It'll be interesting to see whether it is a slow and steady wind down, or a disorganized economic crash, but you should be careful putting any faith into the predictive abilities of the fed, because they are often reactive instead of proactive - they go with whatever is the most convenient policy of the current day instead of the best for long term health.

I believe the next two years will be very difficult. Neither the prices are coming down - nor the inflation will be in control.
If we believe things will get better sooner. Than we are only fooling ourselves. The time is very tough - I am not sure how the poor people will be managing their finances.

[davis196]

Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?
Do you think Fed can do that without causing a recession that may last for several years?

1.Yes, the Federal Reserve has enough power to stop the inflation and put it under control. A big enough interest rate hike can stop the inflation. The problem is that the politicians don't want to cut the government costs and reduce the gigantic US federal budget deficit.
This will cause the Federal reserve to restrain from big interest rate hikes, because it will become difficult for the US government to borrow money and pay debts with higher interest rates.
2.The US economy has been running on steroids for several years(money printing, stimulus packs, Trump's tax cuts). A recession might be healthy for the economy. Lots of bad businesses will go bankrupt, lots of "bullshit job" positions will get shut down. Unfortunately, the "too big to fail" banks and corporations will receive government support again.

[amishmanish]

Inflation is when the liquidity is high but supply is low. As we see the supply of essential goods has suffered greatly due to war and climate change. The option with Fed is to increase rates to make poor man suffer and bring recession. But with decentralized economic system like bitcoin. I think if not now but in future we will have a mean to fight off the monopoly of fed to regulate our money by simple rate increases.

[justdimin]

1.Yes, the Federal Reserve has enough power to stop the inflation and put it under control. A big enough interest rate hike can stop the inflation. The problem is that the politicians don't want to cut the government costs and reduce the gigantic US federal budget deficit.
This will cause the Federal reserve to restrain from big interest rate hikes, because it will become difficult for the US government to borrow money and pay debts with higher interest rates.
2.The US economy has been running on steroids for several years(money printing, stimulus packs, Trump's tax cuts). A recession might be healthy for the economy. Lots of bad businesses will go bankrupt, lots of "bullshit job" positions will get shut down. Unfortunately, the "too big to fail" banks and corporations will receive government support again.

I honestly believe that the best thing we could do right now is pressure the US government and FED to increase the rates as much as possible. If they do that, then the whole world would have to follow and do the same otherwise it is going to hurt a lot. This is why there is a good chance that we could end up with a big problem if things keep going like this, inflation can't be sustained forever.

We need it to go down a bit, maybe not 2% of course , not right away at least, but we need it to go down for sure. At the end of the day, it is all up to them, it's out of our control and we should go back to crypto, to see what we can do and that would be much better.

[South Park]

Do you think that the Federal Reserve has enough power to control inflation within 2% over the next two years?
Do you think Fed can do that without causing a recession that may last for several years?

1.Yes, the Federal Reserve has enough power to stop the inflation and put it under control. A big enough interest rate hike can stop the inflation. The problem is that the politicians don't want to cut the government costs and reduce the gigantic US federal budget deficit.
This will cause the Federal reserve to restrain from big interest rate hikes, because it will become difficult for the US government to borrow money and pay debts with higher interest rates.
2.The US economy has been running on steroids for several years(money printing, stimulus packs, Trump's tax cuts). A recession might be healthy for the economy. Lots of bad businesses will go bankrupt, lots of "bullshit job" positions will get shut down. Unfortunately, the "too big to fail" banks and corporations will receive government support again.

But that is the problem, politicians never want to take responsibility for what they do, even if the healthiest thing that could happen to the economy for its long time prospects is to have a recession and for many unneeded companies to disappear, this means unemployment for a lot of people which will cost voters, local elections and maybe even the presidential elections to the party in power, and they are never going to accept something like this unless they literally had no other choice.

[yhiaali3]

This is the biggest inflation in America in a long time. Inflation is now over 8%. This is the highest rate the country has reached since the very 1980s, so it's not at all easy for the US government to bring that down to 2% as they hope. There are a lot of factors, especially high fuel Unprecedented because of the Russian-Ukrainian war, some economic experts believe that this crisis is similar to the crisis that occurred after World War II and that the United States was able to overcome, but others believe that this crisis will continue and no one can predict how long it will last.
The Republicans accuse the Democrats of being the ones who led the country to this inflation. This means that there are political differences that also fuel this inflation. Therefore, in my opinion, inflation will continue for a long time, especially in the conditions of Corona and the Russian-Ukrainian war.

[2stout]

Looks like for this one that the fed is going to need more than 2 years for this mess to be fixed as there are other global factors that the fed can't do much about.  They must be careful not to overcorrect or correct too soon as to not trigger a recession (unofficially here) or a depression; a lot hangs in the balance.

[Webetcoins]

This is the biggest inflation in America in a long time. Inflation is now over 8%. This is the highest rate the country has reached since the very 1980s, so it's not at all easy for the US government to bring that down to 2% as they hope. There are a lot of factors, especially high fuel Unprecedented because of the Russian-Ukrainian war, some economic experts believe that this crisis is similar to the crisis that occurred after World War II and that the United States was able to overcome, but others believe that this crisis will continue and no one can predict how long it will last.
The Republicans accuse the Democrats of being the ones who led the country to this inflation. This means that there are political differences that also fuel this inflation. Therefore, in my opinion, inflation will continue for a long time, especially in the conditions of Corona and the Russian-Ukrainian war.

I guess that it will probably stay the biggest inflation in USA (and most nations broke their inflation record as well, at least for many decades). Why will we not have this much again? Because, this was due to pandemic. What did governments do to overcome this?

They simply printed money and distributed it to everyone. That should tell you enough about the problem, people failed to work due to pandemic and social distancing and staying at home etc etc, and that resulted with the fact that if you want government to help you out, you will save that day, but screw the next day. That's what we are living right now, and doesn't look like it will be fixed in a minute.