(UnitedReader.com) – In a speech on April 5, Fed governor Lael Brainard admitted the Federal Reserve doesn’t have the ability to capture complete data, so it can’t fully assess the impact of inflation on lower-income households. He said the lack of a breakdown by demographic group, which isn’t something statistical agencies do or can do easily without significant changes, hurts the Fed’s ability to do a proper analysis. Still, the image appears clear enough.
Fed official: Inflation falls hardest on poorer families https://t.co/CcuOTjOMi8
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Brainard seemed to paint the most honest picture of what is happening at the agency. In January, Federal Reserve Chair Jerome H. Powell said he had no indication that inflation impacts people differently based on their socioeconomic status. He simply stated, “some people are just really prone to suffer more” as if it were just an unfortunate twist of fate that lower-income individuals struggle more when prices skyrocket.
What is now clear is that lower-income households don’t have extra money to absorb the increases in expenses due to inflation. They already spend most of it on the basics they need to survive. When prices go up, it puts these people in a pinch. Brainard explained that middle-income households have more wiggle room and can adjust spending more easily, making inflation less impactful on them.
Even with more of a clear picture of what is going on with American households at different economic levels, the Fed has no plans to change its strategy to combat inflation. It will continue with the seven planned interest hikes.
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