Inflation in the US remains high and the US Federal Reserve indicated last week that they expect interest rates to remain higher for longer. In June they still said that their policy rate could rise to 3.4%, but now 4.4% is expected in December. There is the possibility that it could rise to 4.6% early next year. Their economic growth forecast was reduced to just 0.2% for 2022 and Jerome Powell said that the chance for a soft landing is now slim. A global recession looks like a greater possibility and that is why the dollar is so strong, the oil price is falling and stock markets are doing so poorly. There are other things going on as well.
* The Economics Minute is supported by the NWU Business School.
