Inflation Predictions If Biden Secures Another Term

TL/DR –

The article discusses the potential impact of inflation if President Biden is re-elected for a second term. It mentions stubborn inflation has been hitting Americans at every level, significantly affecting consumers, and the Federal Reserve has kept its rates steady due to sticky inflation and strong economic data. However, economists have varied opinions on future inflation: some say it will moderate due to the fading impact of the pandemic, tight monetary policy, and normalization of growth in housing costs, while others argue that while inflation will return to the Fed’s 2% target, interest rates might stay high due to the Biden administration’s commitment to running large budget deficits.

Stubborn Inflation Affects American Consumers

With soaring inflation impacting everything from grocery prices to housing, American consumers are feeling the pressure. Such conditions led to the Federal Reserve maintaining steady rates after their recent Federal Open Market Committee meeting. They left uncertainty about when they might start reducing them.

Concerns About Inflation and the Federal Reserve’s Response

Initially, Fed officials suggested three rate cuts this year. However, the timeline for these cuts has now been pushed back due to persistent inflation and robust economic data. “In recent months, there has been a lack of further progress toward the Committee’s 2% inflation objective,” stated Fed officials in a recent statement. Indeed, inflation has once again accelerated, currently standing at 3.5% according to the consumer price index (CPI).

Inflation and Biden’s Potential Second Term

Rising inflation is a critical issue for presidential candidates. While President Biden has implemented various strategies to combat inflation, such as the Inflation Reduction Act of 2022, some experts believe other factors contributed to its reduction. As The Hill reported, opinions vary on whether a potential second term for Biden would ease prices.

Economists’ Opinions on Inflation if Biden is Re-elected

Mark Zandi, chief economist of Moody’s Analytics, suggests that inflation will continue to moderate under Biden’s potential second term, thanks to the pandemic’s fading impact, tight monetary policy, and housing cost stabilization. William Luther, a director at the American Institute for Economic Research, believes inflation will gradually return to the Fed’s 2% target, irrespective of the election outcome. However, he warns that Biden’s commitment to running large budget deficits could put upward pressure on interest rates.

This article originally appeared on GOBankingRates.com: I’m an Economist: Here Are My Predictions for Inflation If Biden Wins Again

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