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Rising food prices and central banks raising interest rates

  • Published
    21st Jun, 2022

The US central bank announced that it will raise interest rates by 75 basis points (or 0.75 percentage points). The Fed is doing this to bring down inflation to its target rate of 2%. Most commentators and observers of the US economy point out that every time the Fed has tried to reduce inflation even by as little as 2 or 3 percentage points, it has led to a recession. 

What Is Inflation?

  • Definition- Inflation is the rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is rising.
  • Types- Inflation is sometimes classified into three types: Demand-Pull inflation, Cost-Push inflation, and Built-In inflation.
  • Impact- Those with tangible assets, like property or stocked commodities, may like to see some inflation as that raises the value of their assets.
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