Inflation will continue in the US until 2023, according to a Harvard economist

Inflation describes a general rise in prices in all or almost all areas of consumer goods and services.

Inflation describes a general rise in prices in all or almost all areas of consumer goods and services.

Photo: FREDERIC J. BROWN/AFP/Getty Images

Since last year the inflationary phenomenon that the United States is experiencing has not yielded, despite the authorities in charge of economic policy have said that in the coming months the increases in products will decrease, there are those who assure that this situation will end in 2023 .

Kenneth Rogoff, a professor at Harvard University, announced to the FOX network that inflation is not transitory as it is thought, which is why it will stay until next year.

“It’s not so easy to raise interest rates to fight inflation when public and private data is high, when the stock market is high, when house prices are high, when the economy is still weak,” he said. former chief economist of the International Monetary Fund.

In addition, the expert noted that he believes that the Federal Reserve will be “cautious” and certainly “will not go overboard for now on raising interest rates”, and explained that this is why he believes that “we will still have inflation in 2023”.

Inflation rose at the fastest pace in nearly four decades last December as rapid price rises fueled consumer fears about the state of the economy.

The consumer price index increased by 7% in December from a year earlier, according to a new Labor Department report, marking the fastest increase since June 1982, when inflation hit 7.1%.

Faced with rising inflation, pressure will increase on the Federal Reserve to start raising interest rates to combat the recent price increase. Rising interest rates tend to create higher rates on business and consumer loans, slowing down the economy by forcing them to cut spending.

Fed Chairman Jerome Powell has signaled the central bank’s plans to accelerate its withdrawal of support for the country’s economy to combat inflation, which has been higher and longer lasting than policymakers initially expected. .

Regarding the actions that the government is taking, Rogoff said that he believes that The Fed is “seriously” taking its 2% inflation target adding that the central bank also takes a recession “seriously.” The economist added that he believes the Fed will be conservative in its rate hikes as the central bank has indicated.

According to the Department of Labor, rising inflation is eating into the earnings, wages, and salaries that workers have earned in recent months.

Average real hourly earnings rose just 0.1% in December as rising inflation of 0.5% eroded the 0.6% total wage increase. On a year-over-year basis, real earnings were actually down 2.4%.

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