Page 12 - NBIZ October 2021

THE ECONOMY

AT A GLANCE

By Greater Houston Partnership

NO CAUSE FOR ALARM

he U.S. Bureau of Labor Statistics reports The report fueled speculation as to when the U.S.
that inflation, as mea sured by changes Federal Reserve (the Fed) will raise interest rates to keep
in the Consumer Price Index, rose 5.3 inflation contained. The bank now treads a fine line. Raise
per cent in the 12 months ending August rates too soon and the Fed stifles the recovery; raise them
’21. The rate has averaged 5.0 percent or too late, and inflation becomes more difficult to contain.
T better since May of this year. The Federal Open Market Committee met September
21-22 to discuss the pace of recovery for the U.S. economy.
INFLATION, 12-MONTH CHANGE Afterward, Fed Chair Jerome Powell held a press confer-
ence to shed light on the direction the central bank will
take over the next 12 to 18 months. He reiterated that the
cur rent bout of inflation is transitory, brought on by supply
chain issues related to reopening and that substantial pro-
gress has been achieved on recovering jobs lost early in the
pandemic. Since the early stages of the pandemic, the Fed
has purchased $120 billion in treasury bills and mort-
gage-backed securities each month to keep the economy
afloat. While Powell didn’t set a specific deadline, analysts
believe the Fed will begin scaling back these purchases
before the end of the year, perhaps as early as November.
He emphasized that slowing bond purchases did not signal
that the Fed was prepared to raise interest rates. Most
Source: U.S. Bureau of Labor Statistics
analysts believe the Fed won’t hike rates until mid-’22.
12 NBIZ ■ October 2021