The Rising Rates Can Be Handled Due to Solid Us Economy

Financial markets are flashing signs a monetary downturn could arrive sometime next year, as Americans grapple with the best inflation in four decades and the Federal Reserve pushes borrowing costs higher. But Bullard said in an interview with The Associated Press that the central bank wouldn’t have to drive the economy into a recession or drastically raise unemployment to bring inflation down to its 2% target.

“Now we have lots of inflation. However, the question is, can we get (inflation) back to 2% without disrupting the economy? I believe we may,” he said.

Bullard’s optimism coincides with the Fed’s instant pace of interest rate increases, designed to combat the highest U.S. inflation in 40 years.

Higher rates limit the capacity of consumers and organizations to borrow and spend, which can cool growth and inflation. In any case, they likewise risk tipping the economy right into a slump.

Purchaser prices rose 8.6% in May compared with a year prior, and a government inflation report Wednesday could show that they’ve ticked higher.


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