"Inflation has risen in three of the last four months and is slightly higher than it was a year ago, when it helped sink then-Vice President Kamala Harris' presidential campaign. Yet you wouldn't know it from listening to President Donald Trump or even some of the inflation fighters at the Federal Reserve. Trump told the United Nations General Assembly late last month: "Grocery prices are down, mortgage rates are down, and inflation has been defeated.""
"And at a high-profile speech in August, just before the Fed cut its key interest rate for the first time this year, Federal Reserve Chair Jerome Powell said: "Inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs. Upside risks to inflation have diminished." Yet dismissing or even downplaying inflation while it is still above the Fed's target of 2% poses big risks for the White House and the Federal Reserve."
Inflation has increased in most recent months and is slightly higher than a year earlier. Political leaders and some Fed officials have publicly downplayed current inflation trends, pointing to lower grocery prices and mortgage rates and declines from post-pandemic highs. Downplaying inflation while it exceeds the Fed's 2% target creates political risks because many Americans still view high prices as a major financial burden. The Fed reduced its key interest rate assuming tariffs will only temporarily boost inflation. If inflation remains elevated or rises, central bank credibility and its ability to anchor expectations could be undermined, risking wage-price spirals.
Read at Fortune
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