14 October 2022 | Other

Rate hikes have a delayed impact

This year, the Fed raised the benchmark interest rate multiplied by five as a measure to cool the economy. The measures were aimed at suppressing consumer and business demand.

According to Cailin Birch, global economist at the Economist Intelligence Unit, changes in monetary policy will only take some time to affect inflation and the economy as a whole - it usually takes 12 to 18 months. 

She also noted that the Fed has been hiking rates for less than nine months, aggressively for less than six months of them. The delayed impact of rate hikes on price levels is reasonable. 

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