Stopping inflation is going to hurt!

[superadmin]

If you are a person living in the United States right now, you are probably at least medium worried about the economy. From inflation to the stock market, a lot about money feels pretty lousy. The good news: The Federal Reserve is taking action to try to bring down inflation and get the economy back to whatever normal is. The bad news: The action it’s taking isn’t going to immediately make everything better, and in the shorter term, it could make things feel worse.

“Getting inflation lower is usually painful because the Fed mainly has in its policy toolbox tools that make things even less affordable because the Fed’s policy toolbox is geared toward cooling demand,” said Gregory Daco, chief economist at EY-Parthenon. “If the Fed manages to cool demand, then there will be less price pressures, but cooling demand entails essentially making things more expensive.”

To put it more plainly, the idea is to tamp down consumer spending and slow business expansion by increasing costs in other areas (namely, borrowing and loans). The Fed is trying to get you, for now, to stop buying so much stuff.

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