The financial markets took a sliver of optimism in the latest reports showing inflation tapering off slightly from the historic highs of the past several months. But experts are already warning there is still a long and bumpy road ahead to economic recovery. "The Federal Reserve needs to get seven percent inflation down to a target of two percent...that is a very, very long way," says financial planner Richard Rosso.
Rosso tells KTRH the rate hikes already passed by the Fed are just now starting to have an impact. "Rate hikes take quite a bit of time to come through the system," he says. "All the work the Fed is doing is working, albeit slowly, which means they are going to need to continue."
While prices have started to come down on some products, there remains little relief in service sector inflation. "It's taking a much longer time to dissipate," says Rosso. "Things like food inflation and energy inflation, this type of inflation is not as transitory and is going to be tougher to break."
Whether you're an investor or just a consumer, buckle your seatbelt for the months ahead. Rosso warns there is only one way to ultimately slay this inflation beast. "This is a slow-rolling train---you're on the tracks, you can see the train and the lights coming---to recession," he says. "It's coming, it's just taking a lot longer because of where we are in the current labor market."
"If you're looking forward to some sort of pivot or change (in Fed policy), that's not happening anytime soon," he continues. "Again, it's a long way from seven to two percent."
Photo: Dorwart, Mike (uploader)