• iopq@lemmy.world
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    6 months ago

    GKulPLcb0AEZDvR

    We had the most inflation in 2022, then the Fed increased rates and the inflation went lower as the rates went higher

    • Maggoty@lemmy.world
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      6 months ago

      You can’t just throw an image up. You have to source it or we’re going to assume you made it in MSPaint. But you’re already showing signs of not understanding what inflation is. It is not some stand alone year by year metric. It’s a velocity measurement. Like your car’s speedometer. You drove X number of miles in Y time. Instead here it’s you rose X points in 1 year. The previous points do not go away. The wage increases from year 4 do not magically erase inflation from years 1-3, unless they beat year 4 inflation by the the sum of inflation from years 1-3.

        • Maggoty@lemmy.world
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          6 months ago

          Where in my comment do I even mention interest rates? At any rate, you’re not wrong that they’re supposed to curb inflation but they haven’t. You’re own source says-

          Leila Bengali decomposes inflation into interest-rate responsive and unresponsive categories. (whether each inflation category has historically declined >after a surprise interest rate hike)

          Current excess inflation is entirely due to the unresponsive categories.

          That’s that flat red section. It’s unresponsive to the rate change. You can see the blue section responded even before the FED actually made the change. That’s when the FED made statements about raising the rate. So we can see that the responsive section was very responsive. But the unresponsive section is keeping rates from properly coming down.

          • iopq@lemmy.world
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            6 months ago

            When the Fed makes statements, banks already respond because it affects the curve. If you expect higher rates in the future, you wouldn’t accept longer duration bonds right now for the current smaller rate.

            So a statement that rates will be increased actually moves them for anything other than the current over night rates