The Fed Dilemma: Interest Rate Cuts are Needed on the Road to 2% Inflation
Borrowing costs are at levels not seen since the former Fed Chairman Paul Volcker era. Since the inflation peak of 9.1% in 2022, the CPI has declined steadily until late 2023 and early 2024. March 2024 CPI numbers revealed month-by-month increases, but not by overly significant margins: food was up by 0.1%, energy up 1.1%, and shelter up 0.4%. While unemployment is low, US consumer sentiment, as some economists believe, strongly correlates with borrowing costs and consumer credit supply, explaining much of the economic unease the country is experiencing.