U.S Economic Recovery Making Progress – Fed

The U.S Federal Reserve kept interest rates on hold near zero, saying that inflation largely reflected factors that would pass in time.

The announcement, following the end of its two-day meeting, comes amid concerns that rising prices could prompt the Fed to push up interest rates, increasing the cost of borrowing for businesses and consumers.

The central bank will continue to monitor economic progress before easing pandemic support.

Inflation, which measures the rate at which the prices for goods and services increase, continued to surge in the US in June as the cost of energy and used cars in particular increased.

Consumer prices jumped 5.4% in the 12 months to the end of June, up from 5% the previous month.

It marked the biggest 12-month increase since August 2008, according to the US Labor Department.

The Fed’s chairman Jerome Powell has insisted, however, that cost increases would be “transitory” due to prices ticking up in areas associated with the economy reopening such as travel or hospitality, as well as supply bottlenecks.

Inflation is the rate at which the prices for goods and services increase.

It’s one of the key measures of financial well-being because it affects what consumers can buy for their money. If there is inflation, money doesn’t go as far.

It’s expressed as a percentage increase or decrease in prices over time. For example, if the inflation rate for the cost of a litre of petrol is 2% a year, motorists need to spend 2% more at the pump than 12 months earlier to get the same amount.

And if wages don’t keep up with inflation, purchasing power and the standard of living falls.