US Inflation: All Forecasts Collapsed, Broke A 41-year Record

US Inflation: All forecasts collapsed, and inflation broke a 41-year record in America, what will be its effect on the world?

Inflation in America has touched a record level, defying the estimates of economists. In June 2022, the inflation rate in this country reached 9.1 percent.

This is the highest level in the last 41 years. For the first time since 1981, the rate of inflation has been so high in a month.

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The USA central bank, the Federal Reserve, has so far failed to contain inflation in the country.

The USA Labor Department released inflation data on Wednesday, July 13. The Labor Department said that the Consumer Price Index increased by 9.1 percent in June compared to the previous year.

At the same time, there has been an increase of 1.3 percent in comparison to the last month i.e. May. This is the highest increase since 2005 on a monthly basis.

The main reason for increasing inflation in America is the huge increase in the prices of petrol, house rent, and food items.

US Inflation: All forecasts collapsed- Economists’ estimates were put on hold.

According to a report by Moneycontrol, economists had projected inflation to rise by 1.1 percent on a monthly basis and 8.8 percent on an annual basis in the month of May.

However, their estimates did not come true and the latest figures are much higher than the estimates of these economists.

Monetary policy can be strict.

Due to rising inflation, the pressure on the American Federal Reserve Bank to tighten its monetary policy has increased.

Now experts are speculating that the Federal Reserve may increase interest rates again at the end of this month.

Raising interest rates by central banks reduces liquidity in the market and helps in curbing inflation.

Will affect the whole world.

Inflation is increasing in countries around the world. The effect of rising inflation in America will be on the world.

If the USA increases interest rates while tightening its monetary policy, it will reduce demand. There is already a fear of recession due to a lack of demand around the world.

These fears will be reinforced by rising US interest rates. At the same time, Foreign Institutional Investment (FII) will also withdraw more money from foreign stock markets.

This will have a negative impact on many stock markets of the world including India.