The Federal Reserve has been raising interest rates quite a bit this year, five times in total with three really big rate increases. The idea is that if you slow down consumer demand, supply is going down strip demand and when that happens, prices either fall or at least they climb a lot more slowly. That's how you get slower inflation. Unfortunately for all of us and for the Fed, that process takes a while to play out. It sometimes takes a year, two years to fully work.
In the struggle to control inflation, the Federal Reserve has raised interest rates five times already this year.
But those efforts can be blunted if companies keep raising prices regardless. And one industry has illustrated that difficulty particularly starkly: the car market.
Guest: Jeanna Smialek, a federal reserve and economy reporter for The New York Times.
Background reading:
- Many companies have been able to raise prices beyond their own increasing costs over the past two years, swelling their profitability but also exacerbating inflation. That is especially true in the car market.
- Inflation stayed far above the Federal Reserve’s goal in August, as prices climbed more quickly than economists expected.
For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.