How much of an effect will the governments reaction to this inflation spike have on this process? For example raising rates to slow demand versus increasing deficits to spur growth?
That’s probably something to evaluate a bit further down the road. The Fed is unlikely to be responsive to the *immediate* inflationary effect. But the energy shock will make its way up the supply chain, and they will be inclined to hike. But that’s likely far out.
For now, deficit spending is not a big driver. If there’s a push to expand, it would only add to the prospective inflationary pressures
How much of an effect will the governments reaction to this inflation spike have on this process? For example raising rates to slow demand versus increasing deficits to spur growth?
That’s probably something to evaluate a bit further down the road. The Fed is unlikely to be responsive to the *immediate* inflationary effect. But the energy shock will make its way up the supply chain, and they will be inclined to hike. But that’s likely far out.
For now, deficit spending is not a big driver. If there’s a push to expand, it would only add to the prospective inflationary pressures