If inflation has peaked, why are we still raising interest rates?

Make Me Smart

Marketplace

Business, News

4.6 • 5.5K Ratings

🗓️ 4 May 2022

⏱️ 19 minutes

🔗️ Recording | iTunes | RSS

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Summary

It’s the day we answer your questions and to start, one listener wants to know why Federal Reserve Chair Jay Powell is still raising interest rates if inflation has peaked. We’ll also answer an urgent question about the blockchain and supply chains from a listener with a term paper deadline looming. Plus, a question about Airbnb and rents, and why doesn’t the U.S. electrify its railways? Finally, we end with a sci-fi recommendation on this Star Wars Day. May the fourth be with you.

Here’s everything we talked about on the show today:

“Has inflation reached a peak? Three sings that prices could soon come down” from CNN
“Blockchain: A better way to track pork chops, bonds, bad peanut butter?” from The New York Times
“Major container shippers Hapag-Lloyd, ONE integrate with TradeLens blockchain” from Ledger Insights
“Study finds Airbnb units expand market but reduce long-term rentals, including affordable housing” from Carnegie Mellon Tepper School of Business

Do you have a question for Whaddya Wanna Know Wednesday? Send a voice memo or email to makemesmart@marketplace.org, or leave us a voicemail at 508-U-B-SMART (508-827-6278).

Transcript

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0:00.0	I don't know, it's contouring and makeup thing. How about now? Now it's fine, Trolton Thorpe.
0:03.6	Now it's fine. Now it's fine. Now it's fine. Thank you very much.
0:10.2	Hey everybody, I'm Kyle Ruzzo. Welcome back to Make Me Smart, making today make sense.
0:16.2	And I'm Kimberly Adams. May the fourth be with you. Thank you for joining us for what?
0:23.4	Come on, you know, I couldn't raise this. That's fine. I know you had to.
0:26.7	Thank you for joining us for what do you want to know Wednesday, the day that we answer your questions.
0:34.1	You can email those questions to make me smart at marketplace.org or leave us a voicemail.
0:39.6	Our number is 508 UB smart. All right, so we have questions. Let's get to the first one.
0:47.0	Yes, question. Hey, hi, I'm Kimberly. This is Mark out of Chicago. My question is, I keep seeing
0:52.9	headlines about how inflation may have peaked back in March. At the same time, I see nothing but
1:00.0	news stories about how the Fed is planning on raising interest rates, potentially 50 basis points
1:06.5	at their next meeting. And my question is, why would they go ahead and do that if inflation
1:13.7	may have peaked and is coming down? And at the same time, we're seeing all these potential worries
1:20.4	about recessions going on. I know that you're not Jay Powell, but I'm just curious if you can
1:25.4	make this mark. Thanks a lot. But you like to think you know what Jay Powell is thinking. So
1:31.4	why don't you go? I do like to think I know what Jay Powell is thinking. Yes, it's my whole rift.
1:36.8	Okay, so a couple of things, a couple of news items and then the analysis. First of all,
1:42.4	Jay Powell and the Fed did today raise the federal funds rate to range of 0.75 to 1.0 percent.
1:49.4	That is to say they raised it a half a percentage point, 50 basis points is what you will hear.
1:55.4	You might also have noticed that the stock market after Jay Powell said, oh, we're only going to
1:59.8	raise it a half a percentage point, not three quarters of a percentage point. The stock market said,
2:03.8	yay, and went crazy because everybody was worried about more rate hikes in a bigger dynamic.
	...

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