Does Janet Yellen overlook rebound in inflation?
Currently, by all indicators American economy is close to its full employment. Unfortunately, such processes go hand in hand with inflation, and we already see it’s growing again.
The hawks keep stressing the fact that in the USA inflation is climbing up and if Janet Yellen, the Fed’s head fails to cool things immediately, then inflation will show its claws soon. Moreover, they’ve added that the inflation rate is going to exceed 2%, the Fed’s target rate.
For up to four years, inflation has been lower than 2%, and it evidently explains why the central bank’s keeping money effortlessly. The vast majority of the Fed’s officials simply don’t realize that inflation is going to come back to 2% on a regular basis for about two years.
However, the data’s already raising concerns. Inflation boasted a pulse six months ago, soaring 0.2% year-over-year. However, now the Fed’s common measure of inflation, the personal consumption expenditure price index demonstrates 1.25%, notwithstanding falling energy prices.
What might have caused this surge in inflation? One theory explains it’s because of too many jobs. When the unemployment rate reaches its bottom, employees get enough power and start demanding higher wages. As a result, bosses increase wages, but this boosts selling prices too. Perhaps, we’re just facing such an outcome and it has nothing to do with conspiracy.