Interest rates are still low, but for how long?

The Federal Reserve controls interest rates which they have said will stay at near zero for at least another year. As The Federal Reserve considers what to do about our near zero % interest rates, they are influenced by employment numbers and inflation. U of H Economics Professor Dr. Dietrich Vollrath says even though employment rates are rising, inflation isn't as high as we perceive. The inflation that we see out there: remember prices dropped a bunch last year. And now prices are recovering to back to where they were before Covid-19." Dr. Vollrath says The Fed continues with its previous predictions. "They foresee the rates may go up in late 2022 depending upon what inflation and employment look like."

Edgy Economy: Inflation, Interest Rates Cause Concern

Dr. Vollrath says the model the fed has used is "inflation rises as unemployment falls." But the Covid pandemic shutdown changed circumstances. He says what we're now perceiving as high inflation is only prices returning to pre-covid levels. He does agree that employment opportunities and rates are rising, but the fed still hasn't shown its hand. "The Fed is always interesting because they very deliberately try to NOT give you very direct answers about what they are going to do. "

Dr. Vollrath still sees employment indicators pointing to a mid-to-late 2022 rise in interest rates.


Jerome H. Powell, Chair of The Federal ReservePhoto: Joshua Roberts

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