Fed rate moves can’t address some price spikes – By Matt Phillips (Axios) / Sept 25, 2022
The Federal Reserve’s rate hiking campaign — it jacked up rates again Wednesday in its bid to bring inflation down — won’t stop idiosyncratic price spikes that constantly occur in an economy.
Driving the news: Drought-related cutbacks in the projected supply of U.S. agricultural products prompted investors to place bets that prices for staples such as wheat, corn, eggs and butter will be higher in the future.
Why it matters: The battle against inflation is top of mind for many Americans. Events like the heat and drought in the Western U.S. remind us that short-term drivers of some prices are far beyond the Fed’s ability to control.
- Energy prices, which fluctuate based for a range of political, logistical and commercial reasons — like drillers deciding they will or won’t boost production — are another area where the Fed has only modest control, at least in the short term.
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