Fed's Aggressive Actions Tame Inflation Without Recession So Far
• Inflation has fallen from a peak of 9.1% in June 2022 to around 2% currently, without causing a recession or spike in unemployment as feared.
• Falling costs for goods, cooling wage growth, and easing housing/rental inflation have contributed to disinflation.
• The Fed has raised rates aggressively, from near 0% to over 5%, over the past year to curb demand and control inflation expectations.
• Jerome Powell has indicated the Fed may start cutting rates in 2023 as inflation moves back toward its 2% target sustainably.
• Risks remain, but confidence is growing that the Fed has defeated inflation without requiring a recession or steep rise in joblessness.