Episode
How Expecting Inflation Can Actually Create More Inflation
28:41
Published: Thu Jul 28 2022
Description
To fight historic levels of inflation, the Federal Reserve this week, once again, raised interest rates, its most powerful weapon against rising prices.The move was intended to slow demand, but there was also a psychological factor: If consumers become convinced that inflation is a permanent feature of the economy, that might become a self-fulfilling prophecy.Guest: Jeanna Smialek, a correspondent covering the Federal Reserve and the economy for The New York Times.Want more from The Daily? For one big idea on the news each week from our team, subscribe to our newsletter. Background reading: The Federal Reserve has pushed up borrowing costs at the fastest pace in decades.The New York Times invited readers to share their thoughts about the price rises and asked how much more inflation they expected.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.
Chapters
The Federal Reserve is attempting to raise interest rates to control inflation and prevent it from becoming a permanent feature of the economy, as it could change consumer behavior in a self-fulfilling way.
00:00 - 05:47 (05:47)
Summary
The Federal Reserve is attempting to raise interest rates to control inflation and prevent it from becoming a permanent feature of the economy, as it could change consumer behavior in a self-fulfilling way. Fed Chair Jay Powell and his colleagues are working to communicate this message to the public and prevent panic.
EpisodeHow Expecting Inflation Can Actually Create More Inflation
PodcastThe Daily
The podcast discusses the impact of long-term inflation expectations on demand, supply, and pricing, particularly in the context of limited supply and already high inflation, and how it can lead to a cycle of sustained inflation.
05:47 - 16:05 (10:17)
Summary
The podcast discusses the impact of long-term inflation expectations on demand, supply, and pricing, particularly in the context of limited supply and already high inflation, and how it can lead to a cycle of sustained inflation. It emphasizes the need to understand inflation expectations to gauge its impact on behaviors and the economy overall.
EpisodeHow Expecting Inflation Can Actually Create More Inflation
PodcastThe Daily
This podcast discusses the idea that controlling inflationary psychology is crucial to preventing economic downturns in the future.
16:05 - 25:20 (09:15)
Summary
This podcast discusses the idea that controlling inflationary psychology is crucial to preventing economic downturns in the future. It examines how people's beliefs about inflation and their behaviors towards it ultimately impact the economy.
EpisodeHow Expecting Inflation Can Actually Create More Inflation
PodcastThe Daily
President Biden has tested negative for COVID-19 while Senator Joe Manchin reached a deal with fellow Democrats on spending to combat climate change and lower healthcare costs.
25:33 - 28:32 (02:59)
Summary
President Biden has tested negative for COVID-19 while Senator Joe Manchin reached a deal with fellow Democrats on spending to combat climate change and lower healthcare costs. The Biden administration has also offered a possible prisoner swap with Russia to secure the release of two Americans.