Wolfers discusses inflation and interest rates

January 19, 2023 WDET 101.9

Justin Wolfers, WDET 101.9: "Inflation was distressing. Right now, it may still be a little distressing. The future looks like it's going to be a whole lot less distressing.  The Fed's worried because inflation still is above its target level. It tries to get inflation down to 2 percent. Right now, it's around about 5 to 6 percent, and a lot of forecasts say that maybe by the end of the year, it'll be 3 point something percent, so there's still a little bit too much there. What's causing this inflation, by one story there, are too many people with too much income running around trying to buy too much stuff. There is not enough stuff, so, therefore, prices get up, causing inflation. So one solution would be to get people to buy less stuff. That's what high interest rates are trying to do."