One of the biggest concerns with inflation is its impact on the purchasing power of the US dollar. The dollar loses value at times of excessive inflation.
This can lead to higher prices for goods and services, which can reduce the purchasing power of consumers.
In turn, this can lead to reduced consumer spending, which can negatively impact the US economy.
Additionally, different economic sectors might be affected by inflation in various ways.
For example, rising inflation can lead to higher costs for housing and healthcare, making these essential services less accessible for many Americans.
Additionally, businesses may find it more difficult to plan and invest in an inflationary environment, which can lead to a slowdown in economic growth.
The US Federal Reserve, which is in charge of overseeing monetary policy, has a number of measures at its disposal to control inflation. One of these tools is interest rates.
When inflation is high, the Federal Reserve may increase interest rates to reduce borrowing and spending.