Inflation's Wild Ride

Inflation has undergone significant changes since the pandemic began. In 2019, the economy was strong with low inflation, raising concerns about potential economic stagnation. The spread of Covid-19 in early 2020 led to a sharp decline in inflation. President Biden's stimulus package in 2021 boosted consumer demand, leading to a surge in prices due to limited supply. The Federal Reserve initially viewed the price increases as temporary but later raised interest rates to combat inflation. Inflation peaked at 9.1% in 2022, driven by various factors including supply chain disruptions and geopolitical events. By mid-2023, inflation began to cool, prompting optimism for a gradual economic slowdown without a recession. However, inflation remained stubborn in early 2024, leading to uncertainty about interest rate cuts. Policymakers are monitoring the situation to determine if the downward trend in inflation will persist. Despite some moderation, consumers continue to face higher prices in various sectors. The Federal Reserve is considering potential interest rate cuts, with investors anticipating adjustments later in the year.