“Not the reality”: Biden prepares for record inflation

“Not Reality”
Biden is preparing for record inflation

The official inflation figures have not yet been released, but US President Biden is apparently very nervous. As a precautionary measure, he asks his compatriots to remain calm.

US President Joe Biden puts Americans in the mood for very high inflation. At the same time, he warns against excessive fears. “The information that will be released on energy prices in November does not reflect today’s reality,” said Biden. The data would also not show the expected price reductions in the coming weeks and months.

The data for the price hike in November will be released this early afternoon German time. Economists and analysts expect on average that prices have risen by almost 7 percent compared to the previous year. That would be the highest level since 1982. In October the rate was 6.2 percent, the fastest increase in 31 years.

Biden’s economic adviser Brian Deese asked to avoid “over-interpreting” the new inflation figures. “This data is by definition backwards and will therefore fail to capture some of the most recent price movements, particularly in the energy sector.” He pointed to a nationwide decline in gasoline prices. In addition, unemployment has fallen and household incomes have risen.

Interest rate hike soon becomes more likely

In the US, inflation is picking up due to factors that drive prices such as problems with global supply chains and high energy costs. Unlike in Germany, for example, wages are also rising sharply at the same time – whereupon companies raise prices to compensate. In the eurozone, core inflation – that is, inflation without considering strongly fluctuating energy and food prices – rose less sharply. In Germany, one-off effects such as the withdrawal of the VAT cut also play a role.

The high inflation in the US is increasing the pressure on the US Federal Reserve to shut down its large-scale bond purchases faster than previously planned. With the program, the Fed is pumping additional money into the financial markets to keep lending rates low and stimulate the economy. It had started cutting purchases by $ 15 billion a month in mid-November.

According to Fed Chairman Jerome Powell, discussions will likely be held at the upcoming interest rate meeting next week as to whether the rate of reduction should be tightened in view of the persistently high rate of inflation. The Fed may also soon raise its key interest rate. So far, three interest rate hikes have been expected on the market in the coming year.

source site-32