Inflation is here to stay
Inflation last month increased to 8.5 percent over a year ago. That’s up from 7.9 percent just last month. It’s the sixth straight month that inflation has been over 6 percent, and the highest it’s been since 1981. The Fed will almost certainly be raising the funds rate steadily for the rest of the year, perhaps by fifty basis point increments instead of the usual twenty-five basis points. The trick, of course, is to rein in the inflation without causing a severe recession. The price of gasoline rose a staggering 18.3 percent in March alone. But even if you take out the cost of fuel and food, which tend to be much more volatile than other commodities, the “core inflation” was 6.5 percent, again the highest in decades.