Brace Yourselves: Fed Warns of Inflation and Supply Shocks! đŸ˜±đŸ’ž

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Powell warns about inflation

Darling, gather ’round, for the Fed’s very own Jerome Powell has decided to ring the alarm bell louder than a brass band at a funeral. Yes, dear reader, our beloved economist-in-chief has forecasted a future so volatile, it makes a roulette wheel look tame.

Picture this: Our dashing Fed Chair, in Washington D.C., delivering remarks so grave, one might think he was announcing the end of the world—or at least the end of easy money. His message? “Longer-term inflation expectations have shot up, darling, and real interest rates now have more attitude than a diva on opening night.” 🌟

And yes, he’s hinting that these rates might be a crystal ball into even more turbulent times ahead. Because who doesn’t love a bit of spice, right?

He warns us that we’re entering a season of “more frequent, and potentially more persistent, supply shocks.” Sounds charming, doesn’t it? Think of it as supply shocks crashing the party whenever they fancy—like uninvited guests who refuse to leave. These little surprises are the economic equivalent of finding your soufflĂ© has deflated—utterly uncalled for and vaguely unsettling.

Meanwhile, Powell acknowledges that although the rates are currently above the lower bound (the economy’s equivalent of a seaside hotel—a bit chilly, but bearable), previous summers saw rates slashed by 500 basis points—a rather dramatic tan, if you will. But, don’t get too comfy, darlings; returning to that frolicsome lower bound isn’t off the table. Just a dash of prudence, as they say.

In case you’re wondering, supply shocks are those pesky events that suddenly change how much of a good is available—think of it as the economic version of a surprise rainstorm when you’re dressed for a picnic.

According to Joseph E. Gagnon—an economist with a sense of drama—the biggest culprit behind inflation between 2021 and 2023 was, unsurprisingly, supply shocks. Well, well—who would have guessed?

Recently, the Federal Open Market Committee (FOMC)—that charming group of financial aristocrats—decided to keep interest rates steady at 4.25-4.5%. Their logic? Staying put at this level is the best way to keep everyone employed and inflation from spiraling into a theatrical catastrophe. Because, darling, stability is the new black.

And so, the curtain remains up, the rates are on ice, and we all wait with bated breath—or perhaps a glass of gin—for what’s next in this grand economic performance.

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2025-05-16 22:04